European FX Outlook: Three-headed dragon of data for the Eurozone
|What you need to know before markets open:
• Lawmakers planning to phase out Trump’s plan of tax cut weigh on US Dollar, but Trump’s nomination of Jerome Powell for Fed chairman is US bullish.
• The Bank of Japan said Japan's economy is doing well but prices, inflation expectations remain weak and kept monetary policy unchanged.
• Set of macro data across Eurozone with block’s GDP, CPI and unemployment are set to confirm that the low underlying inflation and growth picking up, choosing gradual monetary policy removal was a right option for the ECB.
Tuesday’s market moving events
• China’s manufacturing PMI decelerated to 51.6 in October, exceeding expectations.
• The Bank of Japan stands pat on interest rates, with one MPC member (Kataoka) dissenting the decision.
• French Q3 GDP is expected to rise 0.5% q/q while unemployment is expected to tick down to 11.1% in September
• Eurozone Q3 GDP is expected to decelerate to 0.5% q/q while annual growth is about to rise by 2.6% y/y.
• Eurozone CPI is expected to remain flat at 1.5% in October, but core CPI will be in focus in order to see if there is any underlying price pressure.
• Eurozone unemployment is expected to fall to 9.0% in September.
• US Employment cost index is expected to pick up to 0.6% q/q in Q3.
• Canada’s GDP is expected to rise 0.1% m/m in August.
• Chicago PMI is set to decelerate to 61.0 in October, down from 65.2 in the previous month.
• The Bank of Canada Governor Poloz is set to testify along with Senior Deputy Governor Carolyn Wilkins before the House of Commons Standing Committee on Finance, in Ottawa.
Major forex market movers
• It is EUR in center of market attention for Tuesday with Set of GDP, CPI and Unemployment data due on Tuesday.
• US Dollar is likely to be under pressure with Trump’s plan of tax cut falling short of expectations; Powell’s nomination for Fed chairman may give it a boost.
• The Bank of Canada Governor testimony is likely to expose CAD to renewed pressure as the governor is likely to confirm strong commitment to delay further rate hikes.
Monday’s macro summary
• German retail sales increased 0.5% m/m and real, inflation-adjusted 4.1% y/y in September. In nominal term retail sales rose 6.1% over the year in September.
• ECB's Liikanen said ECB won’t buy bonds indefinitely and the QE easing will be reduced gradually over time.
• Spanish GDP increased 0.8% q/q and 3.1% y/y in the third quarter.
• Spain's direct rule takes hold in Catalonia as secessionists accept elections.
• German preliminary CPI reading for October is expected to increase by 1.7% y/y compared to 1.8% y/y in September.
• US personal spending rose 1.0% m/m in September while personal income rose 0.4% m/m during the same period, both beating the market estimate.
• The PCE price index increased 0.4% in September with core PCE excluding food and energy, increased 0.1% m/m in September. When compared to a year ago PCE price index rose 1.6% y/y with core rising 1.3% y/y.
• Jerome Powell is the most likely next Fed chairman with decision due this Thursday, Reuters reported.
• US Congress is discussing option of phasing out Trump’s plan for tax reduction into 5 years with no decision taken yet.
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