Insights into the Week Ahead: September 25th – 29th Market Anticipation

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Following a bustling week dominated by pivotal Central Bank determinations in the limelight, the impending week holds the promise of a more subdued economic events calendar. The FX market might sway under the influence of month-end portfolio rebalancing.

Noteworthy Tuesday highlights encompass Japan’s BoJ Core Consumer Price Index year-on-year data, alongside the unveiling of the CB Consumer Confidence Index, Fresh Home Sales statistics, and the Richmond Manufacturing Index, all from the United States.

As Wednesday dawns, pivotal events include the unveiling of the Monetary Policy Meeting Minutes in Japan, Australia’s Consumer Price Index year-on-year, and within the United States, the Core Durable Goods Orders and Durable Goods Orders month-on-month figures.

While Thursday unfolds, the spotlight turns to eurozone Consumer Price Index data, and within the United States, the disclosure of final Gross Domestic Product quarter-on-quarter data, Unemployment Claims, and Pending Home Sales month-on-month statistics.

The week culminates with Japan’s Tokyo Core Consumer Price Index year-on-year and unemployment rate revelation on Friday. In the United States, all eyes are on the Core Personal Consumption Expenditures Price Index month-on-month, Revised University of Michigan Consumer Sentiment, and Revised University of Michigan Inflation Expectations.

Additionally, throughout the week, an array of Federal Reserve representatives, including Fed Chair Powell, are slated to deliver speeches.

The consensus for BoJ’s Core Consumer Price Index year-on-year suggests a decline from 3.3% to 3.2%. Nevertheless, ING analysts posit that core inflation, excluding fresh food and energy components, may surge in September due to robust private service price inflation.

In the U.S., CB Consumer Confidence is poised to recede from 106.1 to 105.5. New Home Sales are anticipated to dip from 714K to 699K, primarily due to mounting mortgage rates, despite their prior resilience. Notably, the NAHB housing market index has steadily decreased over the last two months, mirroring stress in the sector. Wells Fargo analysts assert a correlation between the decline in builder confidence and spikes in mortgage rates, a trend expected to manifest in this week’s data.

The Australian Consumer Price Index year-on-year data is projected to exhibit heightened inflation, climbing from 4.9% to 5.2%. A significant driver of this trend is the surging petrol prices, which have manifested in certain service sector price hikes. Additionally, expectations loom of increased food, alcohol, and tobacco prices.

Within the U.S., consensus estimates suggest a drop in the Core Durable Goods Orders month-on-month, from 0.4% to 0.1%, and Durable Goods Orders are expected to witness a further 0.5% decline following a more substantial 5.2% plunge in July. Notably, data related to durable goods orders has recently demonstrated substantial volatility, primarily due to fluctuating aircraft orders that have exhibited significant month-to-month variation.

An easing of both eurozone headline and core inflation is anticipated. The economy faces headwinds and is projected to persist in a deceleration trajectory. Nevertheless, current attention centers on inflation data, particularly in light of recent oil price upswings. ING analysts contend that such price increases will exert a constraining influence on energy inflation.

This week’s U.S. Personal Income and Spending data will hold significant importance. Wells Fargo analysts anticipate a 0.4% rise in the Personal Consumption Expenditures Price Index for August, along with a 0.2% uptick in the Core Personal Consumption Expenditures Price Index. Their forecasts also predict a 0.5% increase in both personal income and spending, sustaining a 12-month trend of growth in personal consumption expenditures. However, the actual Personal Consumption Expenditures Index may face pressures in the upcoming months due to a slackening labor market, underwhelming inflation progress, and the resumption of student loan repayments.

This insightful analysis has been composed by Gina Constantin.