On Monday, October 30, 2023, watch out for two important economic events: the release of Germany's Preliminary Consumer Price Index (CPI) month-on-month (m/m) data and Spain's Flash Consumer Price Index year-on-year (y/y) report. These reports will provide valuable information about inflation trends in these significant European economies.EUR - GermanPrelim CPI m/m
Consumer prices play a crucial role in overall inflation, and currency valuation is affected by inflation because central banks often increase interest rates to fulfill their mandate of containing inflation when prices rise.
According to preliminary data for September 2023, German consumer prices increased by 0.3% compared to the previous month, matching the rate observed in August and aligning with market forecasts.
The next German PreliminaryCPI m/m is set to be released on Monday, October 30, 2023, and the announcement will span the entire day.
Germany'sPreliminary Consumer Price Index m/m suggests a slight decrease, moving from 0.3% to 0.2%.German PrelimCPI m/m was announced on the 28th of September, 2023. You may find the market reactiongraph (EURGBP M1) below:EUR - Spanish Flash CPI y/y
Consumer prices hold a significant share in total inflation, and currency valuation is closely linked to inflation. When prices rise, central banks tend to raise interest rates in line with their mandate to control inflation.
In September 2023, the Consumer Price Index (CPI) was estimated to have an annual inflation rate of 3.5%, according to a preliminary report by the NSI. This represented a significant increase of 0.9% compared to August, which had a 2.6% inflation rate. The rise was mainly attributed to higher electricity prices, which had fallen in September 2022. Additionally, there was a moderate increase in fuel prices, in contrast to a decrease in the same period the previous year. Excluding non-processed food and energy products, the estimated annual variation rate of underlying inflation decreased slightly by three-tenths to 5.8%.
TL;DR
Metic
September 2023
1 Annual Inflation Rate
3.5%
2 Monthly Increase from Previous Month
0.9%
3 Main Contributing Factor
Higher electricity prices (which had fallen in September 2022)
4 Fuel Price Trend
Moderate increase
5 Underlying Inflation (Excluding non-processed food and energy products)
5.8% (decreased by three-tenths)
The upcoming release of the SpanishFlash CPI y/y is scheduled for Monday, October 30, 2023, at 08:00 AM GMT+1.The forecast for the SpanishFlash CPI y/y stands at 3.5%, aligning with the previous projection.
Last time, the Spanish FlashCPI y/y was announced on the 28th of September, 2023. You may find the market reactiongraph (EURJPY M1) below:
31stOctober 2023
Tuesday
On Tuesday, October 31, 2023, a series of importantfinancial announcements are scheduled that could have a substantial impact onthe markets. These include China's Manufacturing Purchasing Managers' Index(PMI), Canada's Gross Domestic Product month-on-month (GDP m/m) data, the Bankof Japan's Interest Rate Decision, the US Employment Cost Indexquarter-on-quarter (q/q), and Consumer Confidence figures, along with NewZealand's releases of Employment Change quarter-on-quarter (q/q) and theUnemployment Rate. These reports are expected to significantly influence marketdynamics.
CNY -Manufacturing PMI
This data is crucial as it serves as a leading indicator of economic health. Companies react swiftly to market conditions, and their purchasing managers hold the most current and relevant insights into the firm's economic outlook.
In September, China's manufacturing sector experienced a notable development, marking its first expansion in six months, as revealed by an official survey published on Saturday. This positive trend was in line with a series of indicators that indicated the world's second-largest economy was showing signs of stabilization. The Purchasing Managers' Index (PMI), which assessed leading manufacturers, climbed from 49.7 to 50.2 in September, as reported by the National Bureau of Statistics. This shift propelled the index just above the critical 50-point threshold, distinguishing an expansion in activity from a contraction. The reading surpassed expectations, exceeding the forecasted 50.0 figure.
The upcoming Manufacturing PMI is set to be released on October 31, 2023, at 01:30 AM GMT+1.
The forecast for Chinese Manufacturing PMI suggests a marginal rise, shifting from 50.2 to 50.5.
Last time, the Manufacturing PMI wasannounced on the 2nd of October, 2023. You may find the marketreactiongraph (USDCNH M1) below:JPY - BoJInterest Rate Decision
Interest rate changes by major central banks can significantly affect the foreign exchange market, often responding to monthly economic indicators. These changes can swiftly and strongly move the market, particularly surprise rate adjustments, making it crucial to predict and respond effectively for profit.
In its September meeting, the Bank of Japan (BoJ) unanimously maintained a -0.1% short-term interest rate and kept the 10-year bond yield target at around 0%. They had also retained the allowance band of 50 basis points on either side of the yield target and a 1.0% cap. The BoJ stated its commitment to patient monetary easing and responsiveness to economic developments, price dynamics, and financial conditions amidst high uncertainties. Their goal remained achieving a sustainable 2% price stability target with wage increases. The committee had also indicated readiness to take further easing actions if necessary, with Governor Kazuo Ueda suggesting a possible end to negative interest rates sooner, supported by wage data.
Parameter / Decision
Details
1 Short-term Interest Rate
Maintained at -0.1%
2 10-year Bond Yield Target
Kept at around 0%
3 Allowance Band for Yield Target
50 basis points on either side
4 Cap on Yield Target
1.0%
5 Monetary Easing Stance
Committed to patient monetary easing
6 Response Strategy
Responsive to economic developments, price dynamics, and financial conditions
7 Price Stability Target
Aiming for sustainable 2%
8 Wage Goal
Increase wages
9 Potential Future Actions
Readiness for further easing if necessary
10 Governor Kazuo Ueda's Remarks
Possible end to negative interest rates, backed by wage data
The upcoming Bank of Japan interestrate decision is scheduled for Tuesday, October 31, 2023, at 03:30 AMGMT+1.
The forecast for the Bank ofJapan (BoJ) Interest Rate Decision suggests a -0.1% value, in line with the previous announcement.
CAD - GDP m/m
This is a significant metric as it functions as the most comprehensive measure of economic activity and serves as the primary indicator of the overall health of the economy.
In August 2023, Canada's economy experienced modest growth of 0.1%, driven by gains in the wholesale trade and finance and insurance sectors, although these were partially offset by declines in the retail trade and oil and gas extraction sectors. Meanwhile, July's GDP remained stagnant, following a 0.2% decline in June. Services-producing industries saw a 0.1% uptick, notably in mining & quarrying (except oil and gas) and accommodation and food services, while goods-producing industries contracted by 0.3%, primarily due to a manufacturing decline linked to a port strike in British Columbia, particularly affecting the chemical manufacturing subsector.
TL;DR
Aspect / Sector
August 2023
1 Overall Economic Growth
0.1% growth
2 Driving Factors for Growth
Wholesale trade - Finance and insurance
3 Negative Impacts
Retail trade - Oil and gas extraction
4 Services-producing Industries
0.1% uptick (notably in mining & quarrying excluding oil and gas, and accommodation and food services)
5 Goods-producing Industries
0.3% contraction (primarily due to manufacturing decline linked to port strike in British Columbia)
6 Particularly Affected Subsector
Chemical manufacturing
The upcoming release of the GDPm/m data is scheduled for Tuesday, October 31, 2023, at 12:30 PM GMT+1.
The forecast for Canada'sGDP m/m indicates a 0.1%change.
Last time, the GDP m/m was announced onthe 29th of September, 2023. You may find the marketreactiongraph (CADJPY M1) below:USD - EmploymentCost Index q/q
This indicator serves as an early signal of consumer inflation since when businesses incur higher labor costs, they often pass these increased expenses on to consumers.
During the second quarter of 2023, compensation costs for civilian workers in the United States increased by 1.0%, showing a slight easing from the 1.2% rise in the previous three-month period. This figure slightly missed market expectations of a 1.1% increase. Wages and salaries saw a 1.0% increase (compared to 1.2% in Q1), while benefit costs rose by 0.9% (compared to 1.2% in Q1). Compensation costs for both private industry workers and state and local government workers also saw a 1.0% increase. On a year-on-year basis, compensation costs had risen by 4.5% in the April to June period, down from a 4.8% increase in the first quarter.
TL;DR
Component / Sector
Q2 2023
Q1 2023
1 Overall Compensation Costs for Civilian Workers
1.0% increase (Missed market expectations of 1.1%)
1.2% rise
2 Wages and Salaries
1.0% increase
1.2% rise
3 Benefit Costs
0.9% rise
1.2% rise
4 Private Industry Workers Compensation
1.0% increase
-
5 State and Local Government Workers Compensation
1.0% increase
-
The release of the EmploymentCost Index q/q is scheduled for Tuesday, October 31, 2023, at 12:30 PMGMT+1.
The forecast for the Employment Cost Index q/q is signaling a 1% figure.
USD - CBConsumer Confidence
Financial confidence, with a substantial impact on consumer spending, which is the primary driver of overall economic activity, is closely watched as a leading indicator.
In September, the Conference Board Consumer Confidence Index declined to 103.0, down from an upwardly revised 108.7 in August. Despite a slight increase in the Present Situation Index to 147.1 from 146.7, the Expectations Index, which evaluates the short-term outlook on income, business, and labor market conditions, fell to 73.7 in September. This drop below the critical threshold of 80 has historically indicated the potential for a recession within the next year. It reflects mounting consumer concerns regarding an imminent recession, aligning with expectations of a brief economic contraction in the first half of 2024.
TL;DR
Aspect / Index
September
August
Note / Remarks
1 Consumer Confidence Index
103.0
Upwardly revised to 108.7
Declined in September
2 Present Situation Index
147.1
146.7
Slight increase
3 Expectations Index
73.7
Not mentioned
Drop below critical threshold (80); Historically indicates potential recession within a year
4 Consumer Concerns
Concerns regarding imminent recession
-
In line with expectations of a contraction in H1 2024
The upcoming release of the CBConsumer Confidence is set for Tuesday,October 31, 2023, at 2:00PM GMT+1.
The CB Consumer Confidence currently stands at 100, marking a decrease from the previous announcement, where it was at 103.
Last time, the CB Consumer Confidence wasannounced on the 26th of September, 2023. You may find the marketreactiongraph (GBPUSD M1) below:NZD -Employment Change q/q
The creation of jobs serves as a crucial leading indicator for consumer spending, which constitutes a significant portion of overall economic activity.
New Zealand's job market exhibited resilience and growth, with a 1% increase in employment during the first quarter of 2023, building on the positive momentum of the preceding period, which saw a 0.8% rise. This steady upward trend in employment reflects the country's ability to adapt to changing economic conditions and seize emerging opportunities, contributing to economic stability and prospects for continued growth.
The upcoming release of the EmploymentChange q/q data is scheduled for Tuesday, October 31, 2023, at 9:45 PMGMT+1.
The employment change quarter q/q is currently forecasted at 0.7%.
Last time, the EmploymentChange q/q was announced on the 2nd of August, 2023. You may find the market reactiongraph (NZDUSD M1) below:
