Below are the most important global events likely to affect FX and bond markets in the coming week starting Sept. 9.
U.S. inflation data for August will take center stage as investors anticipate that the Federal Reserve will start cutting interest rates this month, while the European Central Bank is expected to reduce interest rates when it announces a decision on Thursday.
A slew of data releases from China are in focus for Asia, as doubts continue to swirl about what the world's second-largest economy is doing to boost consumption and keep its exports strong amid rising trade tensions.
A second-quarter growth print from Japan is also on the radar, ahead of the central bank's next meeting in September.
U.S.
U.S. consumer-price inflation data for August on Wednesday will take center stage as investors anticipate that the Fed will start cutting interest rates at its meeting on Sept. 18 and most likely at the two subsequent meetings in November and December.
"The U.S. consumer price data for August is set to show a significant decline in headline inflation, while the core rate could stagnate after four consecutive declines," analysts at LBBW said in a note.
Money-market pricing suggests investors see a likelihood of a 50 basis-point rate cut--rather than the usual 25 basis points--at at least one of those meetings if the economy slows significantly and inflation comes down.
In that light, the University of Michigan preliminary consumer survey for September on Friday could give an important indication of how well the economy is holding up currently.
Other data include producer prices data for August and weekly jobless claims on Thursday.
As November's U.S. presidential election looms closer, investors will also watch out for Tuesday's debate between Democrat candidate Kamala Harris and Republican Donald Trump.
The Treasury will auction $58 billion in three-year notes on Tuesday, $39 billion in 10-year notes on Wednesday and $22 billion in 30-year bonds on Thursday.
LATIN AMERICA
Mexican full-month CPI inflation data for August are due on Monday, while August CPI inflation for Brazil is released on Tuesday.
EUROZONE
The European Central Bank is widely expected to cut its deposit rate by 25 basis points to 3.50% when it announces a decision on Thursday, followed by a press conference given by President Christine Lagarde, though it is likely to be cautious about prospects for further rate cuts as services inflation in particular remains relatively elevated.
"A further 25 basis-point cut in September (following the June rate cut) should be uncontroversial," said Andrzej Szczepaniak, analyst at Nomura, in a note, adding that preconditions for this, including slower wage growth and weaker service-price momentum, have been met.
Peter Schaffrik, global macro strategist at RBC Capital Markets, said anything other than a 25 basis-point rate cut on Thursday would be "a major surprise."
Focus will otherwise center on any clues the ECB provides on the outlook. RBC expects the next rate cut in December, although Schaffrik said the risks of faster or deeper rate cuts is growing.
The ECB is also expected to cut the main refinancing rate by 60 basis points to 3.65%, as it goes ahead with the previously announced reduction of the spread between this and the deposit rate to 15 basis points, from 50 basis points currently.
Other data during the week include final August inflation data for Germany on Tuesday and for France on Friday. Eurozone industrial output figures for July on Friday will also be watched amid signs that the region's industrial sector remains weak, especially in Germany.
On Tuesday, the Netherlands will tap January 2052-dated bonds. Germany will conduct two bond auctions, selling April 2029- and August 2050-dated green bonds on Tuesday and August 2034-dated Bunds on Wednesday. Ireland and Italy have penciled in auctions for Thursday. A Portuguese government bond auction on Wednesday is subject to an announcement on Friday.
SWITZERLAND
Switzerland is scheduled to hold a bond auction on Wednesday.
U.K.
U.K. jobs and wages data on Tuesday, followed by gross domestic product data for July on Wednesday, will be closely watched but are unlikely to alter expectations that the Bank of England won't cut interest rates again until November.
High volatility in the labor market makes the data less reliable for tracking the market from month to month, Pantheon Macroeconomics chief U.K. economist Robert Wood and senior economist Elliott Jordan-Doak said in a note.
Still, GDP data are expected to add to growing signs that the U.K. economy has performed more strongly than expected this year, said Investec economist Philip Shaw.
U.K. industrial-production and trade data for July will also be released on Wednesday, while RICS house-price data for August are due on Thursday.
The U.K. Debt Management Office plans to auction the March 2045 index-linked gilt on Tuesday and the July 2034 conventional gilt on Wednesday.
SCANDINAVIA
Inflation data for Norway are due on Tuesday and for Sweden on Thursday amid continued expectations that Norway's central bank won't start cutting interest rates until at least the end of the year. Sweden's Riksbank meanwhile has already started reducing rates as the economy weakens.
"We predict that inflation in Norway will be stickier than in most other countries, but we see downside risks to Norges Bank's forecast," SEB analysts said in a note.
For Sweden, SEB expects inflation to be mostly slightly below the Riksbank's target while "renewed signs of lower food prices and the recent strengthening of the krona are downside risks," analysts said.
Swedish gross domestic product data for July are due on Tuesday.
Sweden and Norway will hold government bond auctions on Wednesday.
CHINA
A data-heavy week for China starts off with inflation figures on Monday showing how factory and consumer price trends have developed midway through the third quarter, and trade data on Tuesday.
China's consumer-price index likely rose 0.8% in August from a year earlier, up from July's 0.5% increase, thanks to higher food prices, according to a poll of 16 economists by The Wall Street Journal. Meanwhile, the producer-price index may have dropped deeper into deflation, falling 1.4% compared with a 0.8% decline in July.
Chinese exports likely maintained their growth momentum in August, with a WSJ poll of 16 economists forecasting a 6.6% increase in outbound shipments, down slightly from July's 7.0% growth. Import growth likely decelerated to 2.5% last month, compared with 7.2% in July.
Economists at ING think August's trade data likely continued to slow, flagging auto exports as a key category to watch. "If auto exports shift from being a tailwind to a headwind, it could negatively impact China's overall export strength," they said.
A string of releases on Saturday, Sept. 14, will follow, including China's foreign-exchange reserves for August, which likely increased by $40 billion to $3.296 trillion, according to a WSJ poll of economists.
Other data due on Saturday include house-price data, industrial output and retail sales for August.
Observers will be looking for signs that consumer demand is finally starting to pick up, and for light at the end of the tunnel indicating that the property market is starting to strengthen.
A recent run of downbeat data, including an index putting consumer confidence at near record lows, has added to calls for policymakers to roll out bolder stimulus to lift the economy. Markets will be watching any announcements from officials that signal more policy help is on the way, such as cuts to interest rates on outstanding mortgages.
Analysts at Nomura expect China's property sector will continue to face headwinds, saying that any potential mortgage-related policies are unlikely to have much impact on home-buying sentiment.
JAPAN
Monday features a handful of data releases, spearheaded by the second estimate for Japan's second-quarter growth.
The data will be examined for revisions after the economy returned to growth in the April-June quarter, showing signs that the healthy, spending-led economic cycle policymakers have long sought to create is taking shape.
GDP rose 0.8% in the three months to June from the previous quarter, recovering from a 0.6% contraction in the January-March quarter, preliminary data showed. However, Moody's Ratings economists have cut their growth forecast for the year, noting that real GDP shrank 0.9% in the first half.
"We have lowered our 2024 growth forecast for Japan to 0.2% from 1.0% and maintained next year's projection of 0.8% growth," they said.
Political developments will also be watched, as candidates vie to lead Japan's ruling Liberal Democratic Party.
"The economy will be a key issue in the election," said Moody's Analytics senior economist Stefan Angrick.
"Japan has a history of ill-timed or ill-targeted pullbacks in fiscal spending that have left the economy and fiscal metrics worse off," he said. A sudden withdrawal of support could deal some economic damage, he said.
Two Bank of Japan speeches will also be in the spotlight: policy board members Junko Nakagawa on Wednesday and Naoki Tamura on Thursday.
Observers will look for hints into the BOJ's next policy move, after another board member, Hajime Takata, said the central bank needs to "shift gears."
Takata said the central bank will pursue more interest-rate increases if the economy and inflation are in line with its projections.
AUSTRALIA
In Australia, attention is on a speech by the Reserve Bank of Australia's chief economist, Sarah Hunter, on Wednesday. Every word from her speech will be closely scrutinized as pressure mounts on the RBA to join its global peers and cut interest rates.
(MORE TO FOLLOW) Dow Jones Newswires
09-08-24 2014ET
