Weekly Market Outlook: GDP Revisions & RBNZ Meeting

November 11, 2019

By Orbex

The markets open a mixed week ahead which will see both interest rate decisions and GDP revised estimates.

The data for the coming week will give us some insight into how the various economies fared during the third quarter of this year.

From the Australia, New Zealand region, the RBNZ will be holding its monetary policy meeting. The central bank is forecast to cut rates once again. The quarterly inflation expectations data is also due a day before for the RBNZ meeting.

Australia will be reporting on its monthly labor market data, while China will be releasing the industrial production figures.

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Here’s a brief look at the key economic events coming up for the week ahead.

US Retail Sales and Powell Speech

Data from the United States this week will be a mix of economic reports and a speech by Fed Chair Jerome Powell. The data will keep investors busy with something besides the trade war narrative.

US Retail Sales to Rebound

Retail sales in the United States are forecast to rebound in October.

Economists forecast that retail sales will rise 0.3% in October. This comes after retail sales fell by 0.2% previously. Excluding auto sales, core retail sales are set to rise by 0.4%, advancing from the 0.1% increase previously.

Spending has been slower in September. And this could take a while to recover.

Despite the labor market conditions staying tight, spending could take a hit. Consumer sentiment did not change much during the month but gasoline and car sales were down.

US Inflation to Rise Slightly in October

Investors will be watching the monthly inflation report this week. Estimates point to a 0.3% increase in CPI on a month over month basis.

Excluding food and energy, core CPI is forecast to rise by 0.2%. This marks a modest increase in prices from the month before. But on a year over year basis, US CPI is forecast to remain unchanged at 1.7% on the headline and 2.4% on the core.

Fed Speeches Spread Out Over the Week

A number of FOMC members will be coming up over the wires next week. Speeches range from the Fed’s Quarles to Fed Chair, Jerome Powell.

Powell is due to speak on Thursday. He will be testifying to the Joint Economic Committee. His comments on interest rates and monetary policy will be closely scrutinized by traders.

This happens in light of the Fed signaling that it was done with rate cuts after lowering rates at its previous meeting. At the moment, there are signs of the economy picking up steam.

Other members due to speak include NY Fed Williams and St. Louis Fed President James Bullard.

UK GDP Estimates and Inflation Report

After last week’s BoE meeting, investors shift focus to the GDP numbers, inflation, and the jobs report.

The GDP report could move the markets as the data covers the third-quarter period.

However, with the BoE meeting showing two dissenting votes in favor of rate hikes, hints of an uptick in the economy could see some movements in the currency markets.

UK GDP to Rise in Q3

The first estimates for the third quarter-point to a rebound in the economy.

The UK’s economy is forecast to rise by 0.3% in the three months ending September 2019. This marks a full recovery from the 0.2% decline in the second quarter.

On a month over month basis, September’s GDP is forecast to fall by 0.1%. Besides the GDP numbers, manufacturing and industrial production figures will also be coming out.

At the same time, the trade balance numbers for September are also due, making Monday quite busy for the UK markets.

Consumer Prices to Remain Flat in October

On Wednesday, the monthly inflation figures are due.

Headline CPI is forecast to rise by 1.7% in the month of October. This marks the same pace of increase compared to the previous month’s report. The UK’s headline CPI rose by 1.7% in the previous month on a yearly basis.

Core CPI is also forecast to rise by 1.7%, marking the same pace of increase as the previous month. On a month over month basis, however, headline CPI will be flat after a 0.1% increase previously.

Retail price index and producer price index data are also due. Input producer prices are forecast to fall 1.8%, declining from a 2.8% fall in the month before on a yearly basis.

By Orbex