Forex Weekly Outlook: US retail sales, Critical Brexit Summit, and more

After the Fed provided some hints toward the next rate decision and trade talks rocked markets, the focus shifts to the Brexit crunch time and critical consumer data from the US. Here the highlights for the upcoming week.

  1. German ZEW Economic Sentiment: Tuesday, 9:00. This forward-looking survey of around 300 analysts and investors is released early in the month and is watched by policymakers. After several months of rapid deterioration, Economic Sentiment surprised in September with a jump to -22.5 points. However, the negative number represents pessimism. A similar score is likely for October.

  2. UK inflation: Wednesday, 8:30. The Bank of England has seen the headline Consumer Price Index hover around the bank's target of 2% in the past few months. However, annual inflation slipped to 1.7% in August. Governor Mark Carney and his colleagues may reconsider their intention to raise rates – based on assumptions for a smooth Brexit – if CPI continues falling.

  3. US retail sales: Wednesday, 12:30. The US economy is centered around consumption which holds up the economy while investment and manufacturing are struggling. Back in August, headline sales rose by 0.4% core sales remained flat, and the all-important control group increased by 0.3%. Any signs of fatigue from the consumer – as expressed in some consumer sentiment surveys – may weigh on the dollar.

  4. Australian employment: Thursday, 00:30. Australia enjoyed several months of substantial gains in job creation. Employment Change stood at 34.7K back in August and a more moderate increase is likely in the figures due out for September. The Unemployment Rate stood at 5.3% and a similar level is likely now.

  5. EU Summit on Brexit: Thursday, Friday. Leaders of the European Union convene for a regular summit, but the topic that dominates the agenda is extraordinary – sorting out Brexit just two weeks ahead of the deadline. Will Boris Johnson find common ground with his counterparts? And if he does compromise with them, will he continue receiving support from the hardliners in his party? A solution to the question of Northern Ireland's status remains critical. Apart from reaching a deal, the other options are extending Brexit once again – as the Benn Act requires, or leaving without an accord.

  6. Chinese GDP: Friday, 4:00. The world's second-largest economy publishes its Gross Domestic Product figures less than three weeks after the quarter ends. While many doubt the accuracy of the figures, they move markets. Chinese growth has slowed down to 6.2% yearly, in line with the government's projections. A drop below 6% would cause jitters all over the world.

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