On Monday 16th: Nothing
On Tuesday 17th: German ZEW Economic Sentiment Index, Canadian Inflation Rate YoY, American Retail Sales MoM and Japanese Balance of Trade
On Wednesday 18th: UK Inflation Rate YoY, American Building Permits, Fed Interest Rate Decision, FOMC Economic Projections and Fed Press Conference
On Thursday 19th: UK BoE Interest Rate Decision and Japanese Inflation Rate YoY
On Friday 20th: Japanese BoJ Interest Rate Decision and UK Retail Sales MoM
Tuesday 17th of September
The ZEW Indicator of Economic Sentiment for Germany suffered a dramatic decline in August 2024, plummeting to 19.2 from 41.8 in July. This marked the lowest point in seven months and significantly missed market expectations of 32. The 22.6-point drop from July was the largest decline since July 2022, highlighting a growing pessimism among German investors about the country's economic prospects. Market participants will be focused on the release of the September ZEW Economic Sentiment Index, scheduled for 9:00 AM GMT.
The annual inflation rate in Canada experienced a decline in July 2024, falling to 2.5% from 2.7% in June. This marked the lowest increase in consumer prices since March 2021, aligning with the Bank of Canada's projections for a slowdown in inflation during the second half of the year. Despite this positive development, inflation is still expected to rebound in the future. Month-over-month, the Canadian Consumer Price Index (CPI) rose by 0.4% in July. Investors will focus on the release of the August Canadian Inflation Rate YoY data, which is anticipated to decrease to 2.4%, at 12:30 PM GMT.
The U.S. retail sector experienced a significant surge in July 2024, with sales increasing by 1% compared to the previous month. This marked the largest gain since January 2023 and exceeded market expectations, which had anticipated a modest increase of 0.3%. It's important to note that retail sales data is not adjusted for inflation and primarily reflects the sales of goods. Investors will be focused on the release of the August retail sales data, which is expected to show a decline of 0.3% month-over-month. The data is scheduled for release at 12:30 PM GMT.
Japan's trade deficit widened significantly in July 2024, reaching JPY 621.84 billion. This marked a substantial increase from JPY 61.33 billion in the same month of the previous year and surpassed market expectations of a shortfall of JPY 330.7 billion. This was the fifth time this year that Japan recorded a trade deficit, primarily due to the rapid growth of imports outpacing exports. The August Japanese Balance of Trade data is expected to show a deficit of JPY 590 billion when the data is released at 11:50 PM GMT.
Wednesday 18th of September
The annual inflation rate in the United Kingdom experienced a slight uptick in July 2024, rising to 2.2% from 2% in the previous month. However, this increase fell short of market forecasts, which had anticipated a rate of 2.3%. Meanwhile, the core inflation rate, which excludes volatile items like food and energy, eased to 3.3% from 3.5%, also missing expectations of 3.4%. Month-over-month, the Consumer Price Index (CPI) declined by 0.2% in July. The release of the August UK Inflation Rate YoY data is scheduled for 6:00 AM GMT.
The number of building permits issued in the United States decreased in July 2024. The seasonally adjusted annual rate fell to 1.406 million, down from a revised preliminary estimate of 1.396 million. While single-family home permits saw a slight increase, permits for larger buildings with five or more units experienced a significant decline of 10.7%. The August building permits data is expected to show a slight increase to 1.42 million when the data is scheduled for release at 12:30 PM GMT.
In a speech at the Jackson Hole Economic Symposium, Federal Reserve Chairman Jerome Powell strongly hinted that the central bank is poised to lower interest rates at its upcoming September meeting. Powell expressed increased confidence that inflation is moderating towards the Fed's target of 2%, suggesting that it's time to shift monetary policy towards less restrictive conditions. Prices in the U.S. rose 2.5% in August, the lowest level since February 2021.
This sentiment aligns with the minutes from the Federal Reserve's previous meeting, which indicated that most policymakers believe a rate cut is appropriate this quarter. While market participants anticipate the Fed to lower interest rates to 5.25% in the upcoming meeting, they are closely watching for the release of the Federal Open Market Committee's (FOMC) economic projections and the subsequent press conference. These events will provide further insights into the Fed's future policy direction.
Thursday 19th of September
The Bank of England (BoE) decided to lower its Bank Rate by 25 basis points to 5% in its August meeting. However, the central bank emphasised a cautious approach to further monetary policy easing, stating that officials need to be more confident that inflation will remain subdued. The rate cut marked a departure from the 16-year highs that the benchmark rate had reached.
While the slowdown in UK inflation was a positive factor, concerns about higher services price growth and the potential for second-round effects that could undermine the central bank's progress in reducing inflation influenced some members' decision.
Despite these concerns, the Committee expressed its expectation that headline inflation will continue to decline and that inflation expectations will converge towards the target. Additionally, the MPC noted that the restrictive monetary policy stance is likely to lead to a slowdown in GDP growth below potential and a softening of the labour market, justifying a less restrictive policy.
Looking ahead, market participants anticipate that the BoE will maintain interest rates at 5% in its upcoming meeting,which is scheduled for 11:00 AM GMT.
The annual inflation rate in Japan remained unchanged at 2.8% in July 2024, marking the third consecutive month at this level and the highest point since February. On a monthly basis, the Consumer Price Index (CPI) rose by 0.2% in July, the smallest increase in three months, following a 0.3% gain in June. The release of the August Japanese Inflation Rate YoY data, which is expected to increase to 3.0%, is scheduled at 11:30 PM GMT.
Friday 20th of September
The Bank of Japan (BoJ) took a significant step towards normalising its monetary policy in July 2024. The central bank raised its key short-term interest rate to around 0.25%, marking a departure from the near-zero interest rate policy it implemented in March. Additionally, the BoJ announced plans to gradually reduce its monthly bond-buying operations,aiming to lower its massive balance sheet and gradually retreat from the bond market.
In its quarterly outlook, the BoJ revised its inflation projections for the coming years. It now expects core inflation to fall to around 2.5% in fiscal year 2024, which is lower than the April forecast of 2.8%. For fiscal years 2025 and 2026, the central bank maintained its inflation outlook at around 2%.
On the GDP front, the BoJ lowered its growth forecast for fiscal year 2024 to 0.6% from 0.8%, reflecting a statistical revision. However, the bank maintained its GDP outlook at 1.0% for fiscal years 2025 and 2026.
Looking ahead, market participants anticipate that the BoJ will maintain interest rates at 0.25% in its upcoming meeting, which is scheduled for 4:00 AM GMT.
Retail sales in the United Kingdom experienced a positive rebound in July 2024, increasing by 0.5% month-over-month.This marked a reversal from the downwardly revised 0.9% decline in June and aligned with market expectations. Investors will focus on the release of the August retail sales data, which is expected for 6:00 AM GMT.
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