Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Weekly Outlook: US, UK, And CA CPIs; NZ GDP And AU Jobs Data

By JFD TeamMarket OverviewSep 13, 2021 03:36AM ET
Weekly Outlook: US, UK, And CA CPIs; NZ GDP And AU Jobs Data
By JFD Team   |  Sep 13, 2021 03:36AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Following the RBA, the BoC and the ECB decisions last week, we don’t have any central banks on the agenda for this week.

However, we do get several important data, which could shape market expectations around central bank policies. We get inflation data for August from the US, the UK, and Canada, as well as New Zealand’s GDP for Q2 and Australia’s employment report for August. On Monday, there are no major events or releases on the schedule.

On Tuesday, during the early European morning, we get the UK employment report for July. The unemployment rate is forecast to have ticked down to 4.6% from 4.7%, while the net change in employment is anticipated to show that the economy has added 75k jobs in the three months to July, down from 95k in the three months to June. As for the average weekly earnings, both the including and excluding bonuses metrics are expected to have slowed.

UK real wages
UK real wages

At its latest gathering, the BoE lowered the threshold of when they will start reducing their stock of bonds. Specifically, they said that they will do so when the policy rate hits +0.50%, by not reinvesting the proceeds of maturing debt. The previous guidance was for the Bank to not start unwinding its bond purchases until interest rates were near +1.5%. 

In our view, this means that QE tapering may start earlier than previously anticipated. Now, the big question is when the time would be appropriate for officials to start raising interest rates. Last week, BoE Governor Andrew Bailey revealed that, even at the prior gathering, policymakers were split evenly between those who felt the minimum conditions for raising interest rates were met and those who believed that the recovery was not strong enough. 

This suggests that a rate hike could take place sooner than many may have been anticipating, and a decent employment report, combined with accelerating inflation on Wednesday, and a rebound in retail sales on Friday, could allow GBP-traders to increase their hike bets and push the pound higher this week, especially against currencies the central banks of which are expected to keep interest rates at low levels for much longer, like the euro, the yen and the aussie.

Later in the day, the spotlight is likely to fall on the US CPIs for August. Both the headline and core rates are expected to have ticked down to +5.3% yoy and +4.2% yoy, from +5.4% and +4.3%, respectively. Despite the potential slowdowns, both rates are expected to have stayed well above the Fed’s objective of 2%, which could add to questions as to whether the latest surge in inflation is transitory or not.

US CPIs inflation yoy rates
US CPIs inflation yoy rates

Following the August employment report, market participants pushed equities higher and the dollar lower, on reduced expectations that the Fed could indeed start scaling back its QE purchases this year. However, last week, several policymakers signaled that they still expect to begin the process before the end of this year, despite the slowdown in jobs growth seen in August.

This revived hopes on that front and resulted in a pullback in stocks and a strong rebound in the US dollar. So, with that in mind, inflation rates still well above the Fed’s target may allow market participants to increase bets over a first tapering step later this year and could thereby support the US dollar further and allow further correction in equities.

However, whether the Fed will indeed taper this year is not set in stone yet. Announcing such a step this month is now off the table, with the official announcement perhaps more likely to be delivered in November. That said, this could be the case if data heading into that meeting continue to come on the strong side. Upcoming employment reports could prove critical as they may indicate whether August’s miss was a one-off incident, or not.

On Wednesday, during the Asian session, we have China’s fixed asset investment, industrial production, and retail sales, all for August. All three of the yoy rates are expected to have declined notably, but yet to have stayed at historically decent levels. Therefore, we don’t expect such numbers to trigger serious concerns with regards to the performance of the world’s second largest economy. 

Yes, economic momentum has weakened recently due to the outbreak of the Delta coronavirus variant, but last week, data showed that the nation’s exports grew faster than expected during the month of August due to solid global demand, suggesting that, despite some domestic headwinds, the Chinese economy may receive fuel and support from the rest of the world.

During the early EU session, the UK CPIs for August are coming out, with expectations pointing to strong accelerations in both headline and core terms. Specifically, both the headline and core rates are forecast to have jumped to +2.9% yoy, from +2.0% and +1.9%, respectively. As we already noted, this may allow participants to add to bets over a rate hike by the BoE soon, and thereby prove supportive for the British pound.

UK CPIs inflation yoy rates
UK CPIs inflation yoy rates

Later in the day, we have more August CPIs coming out, this time from Canada. The headline rate is forecast to have inched up to +3.9% yoy from +3.7%, while no forecast is available for the core one.
Canada CPIs inflation vs WTI yoy change
Canada CPIs inflation vs WTI yoy change

Last week, the BoC kept interest rates at a record low of +0.25% and maintained its QE program, as was widely anticipated. In the statement, it was noted that they expect growth to strengthen in the second half, though a fourth coronavirus wave and supply bottlenecks could weigh on the recovery. What’s more, they maintained the guidance that the economic slack would be absorbed sometime in H2, 2022, which means this is when they expect to start raising interest rates.

Following the latest disappointing data, especially the economic contraction in Q2, many participants may have been expecting the Bank to announce a delay in its tapering plans. However, that was not the case. Yes, there was no action at this gathering, but this could be due to the fact that the federal elections are planned in a week, and perhaps because this was a smaller meeting, with no updated economic projections and a press conference. 

In our view, the door for another tapering in October remained open, and this was confirmed by BoC Governor Tiff Macklem, who on Thursday said that he and his colleagues are moving closer to a time when continuing to add stimulus through QE won’t be necessary. Therefore, following Friday’s decent employment data, further acceleration in the CPIs could add to the case of an October tapering and could support somewhat the loonie.

On Thursday, Asian time, New Zealand releases its GDP data for Q2. The qoq rate is expected to have ticked down to +1.5% from +1.6%, but this is likely to take the yoy one up to 16.4% from 2.4%.

At the previous gathering, the RBNZ delayed raising interest rates, at a time when the financial community was more than certain for such a move. Policymakers changed their minds after the nation entered a lockdown due to new coronavirus cases, however, they signaled that they still expect to push the hike button before year end. The Bank’s next gathering is scheduled for Oct. 6, and decent GDP numbers could add to the likelihood of a hike then.

We also get Australia’s employment report for August. The unemployment rate is expected to have risen to 4.9% from 4.6%, while the net change in employment is anticipated to show that the economy has lost 70.0k jobs, after gaining just 2.2k in July.

Australia unemployment rate
Australia unemployment rate

At its latest gathering, the RBA proceeded with the planned tapering from AUD 5bn to AUD 4bn per week, but it delayed the date for a new review from November 2021 to February 2022, due to a delay in the economic recovery and increased uncertainty associated with the outbreak of the Delta coronavirus variant.

As for interest rates, officials stuck to their guns that they are likely to keep them at present levels at least until 2024. So, with that in mind, the employment report could confirm the Bank’s view and choices, but we don’t expect a major reaction from the aussie, as despite the most recent lockdown measures in Australia, now, vaccinations are gathering pace, something that raises hopes that the nation could abandon restrictions sooner than previously thought.

Later in the day, we have the US retail sales for August, with both the headline and core rates expected to have risen somewhat, but to have stayed in negative territory.

Finally, on Friday, we get the UK retail sales for August. Both headline and core sales are expected to have rebounded 0.5% mom and 0.7% mom, from -2.5% and -2.4%, respectively. Eurozone’s final CPIs for August are also coming out, but as it is always the case, they are expected to confirm their preliminary estimates.

Weekly Outlook: US, UK, And CA CPIs; NZ GDP And AU Jobs Data

Related Articles

Weekly Outlook: US, UK, And CA CPIs; NZ GDP And AU Jobs Data

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval. 73.90% of the retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure - .
Continue with Google
Sign up with Email