This week will be massive for markets as investors closely watch to see how inflation moderates. In addition to watching to see if inflation comes down from a 40-year high, Wall Street will pay close attention to the midterm elections. Right now polls are suggesting Republicans have a good chance to take over both the House and Senate.
In addition to the inflation report and the midterm election, traders will also closely monitor the preliminary University of Michigan Survey. Sentiment is expected to soften, but traders will pay close attention to inflation expectations, which have been pushing higher.
EU
A quiet week as far as upper-tier economic data is concerned which means the focus next week will be on commentary from ECB policymakers including President Lagarde on Monday, among others.
UK
The dust continues to settle in the UK but as BoE Governor Bailey indicated last week, it’s going to take time to regain confidence and credibility in the markets. The events of the last couple of months have severely damaged the UK’s reputation which was already tarnished by those of recent years. All eyes are now on the Autumn Statement on 17 November.
We’ll get a steady stream of BoE commentary throughout the week which comes on the back of a very dovish rate hike, in which Bailey and colleagues pushed back strongly against market expectations. GDP data on Friday will be of interest but most have already accepted that the country is in recession.
Russia
Inflation data is the most notable release next week after the central bank left its key rate unchanged at 7.5% in October.
South Africa
A relatively quiet week containing a few tier two or three economic releases, the highlight of which is probably manufacturing production figures on Thursday, both of which are expected to have declined in September.
Turkey
Official inflation reached more than 85% in October as the central bank continues to slash interest rates. The inflation data is clearly no deterrent and if anything, President Erdogan sounds more determined than ever to see rates fall further.
Industrial production and unemployment data among the economic releases next week.
Switzerland
Inflationary pressures eased a little last month which may come as a relief to SNB policymakers, some of whom we’ll hear from next week including Chairman Jordan. Further hikes still look likely but to what extent? Policymakers may shed some light.
China
As China’s zero-Covid policy continues, the recently released manufacturing and non-manufacturing PMIs for October fell to 48.7 and 49.2, respectively, below the 50 threshold separating contraction from expansion.
Investors should pay close attention to China’s foreign trade data for October on Monday to see if China’s trade surplus is tending to deteriorate. The CPI on Wednesday is also key as an increase will reduce the ability of the PBOC to support the economy.
The market is currently discussing the possibility of the PBOC lowering the reserve requirement ratio again in order to release more liquidity. These policies may support a more accommodative monetary policy environment in China, which will support growth.
India
Very few economic releases are due next week with the only one of note being industrial output on Friday.
Australia And New Zealand
The AUD/USD and NZD/USD have rallied slightly as market risk sentiment has warmed over the past two weeks. They’ve been broadly weak overall against the US dollar as China’s zero-Covid policy continued, and the market was still digesting the Fed rate moves.
The RBA raised interest rates by 25 bps at its monetary policy meeting on 1 November, raising the cash rate from 2.60% to 2.85%. The RBA updated its forecasts, raising its expectation for peak inflation to 8.0% from 7.75%. Third quarter CPI released last week rose by 7.3% in October, above market expectations of 7.0% and the previous value of 6.1%. The RBA is likely to continue its policy of raising interest rates at the next meeting on 6 December.
As the overall level of inflation in New Zealand remains high, the market expects a 50-75 bps rate hike at the RBNZ’s next central bank rate meeting on 23 November.
Japan
The Bank of Japan remained committed to its super-loose monetary policy at its last meeting while raising inflation expectations across the board (the CPI ex-fresh food forecast for FY2023 was raised from 1.4% to 1.6% per annum). It will release its summary of opinions from board members on Monday.
Japan may intervene again in the FX market in the coming weeks if USD/JPY continues to aggressively rally. There has been discussion in the market about whether the Bank of Japan will undertake a step-by-step exit from its yield curve control (YCC) in the future, although policymakers have pushed back against this.
Singapore
According to the Monetary Authority of Singapore, core inflation risks remain tilted to the upside, and the economy is expected to grow at a below-trend rate in 2023. Singapore’s CPI recently hit 7.5% in September, with the core CPI at 5.3%. Business confidence also fell sharply to -20 in the third quarter, compared to -8 previously.