A busy week out of the US
The week ahead mostly will be about the European countries. Inflation in Eurozone, UK, and Canada, with GDP and trade data from China, will be the main market drivers, while in the US, still, everything is about inflation. At the same time, we must follow the Earnings reports and geopolitical news such as the Russia-Ukraine war and the ongoing revolution in Iran, which can completely change the political equations of the region and affect energy prices all across the globe.
1- China GDP – Tuesday
Officials and policymakers in China actively followed their COVID-zero policy and with continuing challenges in the real estate sector, created uneven economic growth. However, after the weakness seen in the manufacturing and non-manufacturing sectors, Retail Sales and Industrial activities in the second quarter, which ended with a 2.6% slump in the GDP, given some improvement in monthly indicators, a rebound in Q3 is anticipated. The consensus forecast for Q3 GDP is to rise by 3.4%. The annual GDP rate in Q3 also should be raised by 3.4%. This data is supposed to help the Yuan regain some of its recent losses.
2- German Economic Sentiment- Monday
As the largest economy of the Eurozone, economic sentiment in Germany is always important for Euro and other EU members. Energy crises and costs in Europe can affect the October ZEW economic sentiment to decline deeper to -66 from -61.9 in September. With overall pessimism over Europe that dominates all economic sentiments and outlooks, it seems unlikely that Germany and indeed the Eurozone as a whole can escape a recession. Therefore, pressure on the European currency and stock markets will continue future.
3- UK CPI – Wednesday
After reaching 9.9% in August, price gains have been led particularly by energy prices, which rose 52% in August. Data shows that inflation pressures are evident elsewhere too, as services prices rose 5.9% and August Core inflation, which excludes energy, food, alcohol, and tobacco, rose by 6.3%. For September, the consensus forecast is that price pressures can continue by 10% annually. Even though the monthly figure is expected to slow down to 0.4% in September, from 0.5% seen in August, still tilts the risks toward a larger rate hike in November BoE meeting. with these data, pressure on the markets and the pound continues.
4- Canada CPI – Wednesday
Canadian inflation data are expected to show a further deceleration of inflation. CPI is expected to fall to 6.6% in September from 7.0% in August. However, the trimmed mean CPI is expected to remain steady at 5.2%. These expected data can slow the pace of the BoC rate raise but would not be enough to discourage the central bank from further tightening. Overall data can support the Canadian Dollar against its crosses.
5- Earnings of the week
Bank of America and Charles Schwab will report on Monday before the market opens. J&J, Netflix, and Goldman Sachs are due to publish the earnings report on Tuesday. Tesla and IBM will report on Wednesday. On Thursday, L’Oreal, Philip Morris, Union Pacific, and AT&T will report their earnings. And finally on Friday, Verizon and American Express will be the most know companies that must publish their third-quarter earnings report.