The Week Ahead: Consumer Confidence and Jobless Claims: A US Dollar’s Tale

Highlights

• September’s US consumer confidence and PCE Price Index numbers pivotal for the Greenback
• Prelim Eurozone inflation figures to signal rate environment.
• China’s private sector PMIs affecting global markets.

For the Dollar:

Consumer confidence numbers for September kickstart another pivotal week for the Greenback. Steady consumer confidence would support a positive consumption outlook and a more hawkish Fed interest rate trajectory.

Ahead of a busy Friday session, the finalized Q2 GDP and jobless claims also warrant consideration. The jobless claims will garner more investor interest. A spike in jobless claims should ease fear of a more aggressive Fed interest rate trajectory.

However, the US economic indicators on Friday will likely dictate the dollar trajectory ahead of the US Jobs report. The Core PCE Price Index, personal income, and personal spending will give the markets a lay of the land vis-à-vis consumption and demand-driven inflation.

Beyond the numbers, Fed speakers will also influence the dollar. Investors will likely react to hints of the Fed planning to hit the policy brakes.

For the EUR:

The German economy will be in focus early in the week, which could put more pressure on the EUR. German business and consumer confidence figures will draw investor interest on Monday and Tuesday.

A slide in the Ifo Business Climate Index would reinforce the gloomy economic environment and raise concerns over labor market conditions. Deteriorating labor market conditions will likely weigh on the GfK Consumer Climate Index. A slide in consumer confidence would signal a pullback in consumption, further impacting the services sector.

On Thursday, prelim German inflation numbers for Germany will also move the dial ahead of German unemployment figures on Friday. Softer inflation and steady unemployment would likely provide consumers modest relief.

However, prelim Eurozone inflation figures will need to soften sharply to ease the fear of a higher-for-longer interest rate environment.

Beyond the numbers, investors should monitor the ECB calendar for ECB commentary throughout the week. The ECB will release the ECB Economic Bulletin on Thursday. which will garner more interest than usual.

For the Pound:

The Pound may enjoy some respite after falling for a third consecutive week to $1.22348. However, investors will respond to Q2 GDP numbers on Friday.

Beyond the numbers, Bank of England member speeches also need consideration. The GBP/USD pair will respond to comments relating to the economy and monetary policy.

For the Loonie:

GDP numbers for July will provide direction to the Loonie. Another monthly contraction should allow the Bank of Canada to hit the brakes on the monetary policy tightening cycle.

Other stats include wholesale sales numbers. The Loonie is unlikely to react to the wholesale sale numbers.

However, oil prices and market risk sentiment will move the dial.

Out of Asia:

For the Aussie Dollar:

The Aussie Dollar will also rest in the hands of commodity prices and market risk sentiment. However, August retail sales figures will influence investor sentiment on Thursday. A bounce back in retail sales would ease concerns over consumption and raise the threat of hawkish RBA comments vis-à-vis monetary policy.

Economic indicators from China also need consideration, with private sector PMIs out on Friday.

For the Kiwi Dollar:

Private sector PMIs from China will impact the Kiwi Dollar on Friday. The Caixin service and manufacturing PMIs will affect the Kiwi more than the NBS numbers.

There are no economic indicators from New Zealand to influence sentiment toward RBNZ monetary policy.

For the Japanese Yen:

Inflation and industrial production will put the Japanese Yen under the spotlight on Friday. Softer Tokyo core inflation numbers would likely fuel speculation of a shift in the Bank of Japan’s views on negative interest rates.

Industrial production figures for August will also draw investor interest on Friday.

However, the markets will likely brush aside the BoJ Monetary Policy Meeting Minutes. The minutes are for the August meeting.

Out of China

Private sector PMIs for September will have a material impact on the global financial markets. The Caixin Manufacturing and Services PMIs need to reflect a pickup in private sector activity to support a more optimistic outlook for the Chinese economy.

A contraction across the services and manufacturing sectors would adversely impact riskier assets at the end of the week.