Focus on the Fed, the BoE and the BoJ

On Monday 18th: The US NAHB/Wells Fargo Housing Market Index is released.

On Tuesday 19th: The RBA publishes its Monetary Policy Minutes, Eurozone and Canadian Inflation figures are due, along with US Building Permits and the Japanese Trade Balance.

On Wednesday 20th: UK inflation data comes out, the BoC releases its Summary of Deliberations, and the Fed meets to set the direction of Monetary Policy.

On Thursday 21st: The BoE meets on Monetary Policy, while the US Philadelphia Fed Manufacturing Index and Japanese Inflation figures are also due.

On Friday 22nd: The BoJ meets to set its Monetary Policy, UK Retail Sales are due and a host of Flash Manufacturing and Services PMIs are to be published.

Weekly outlook

A busy week for investors and traders this week! Monetary Policy Meetings are due for some of the world's most advanced economies, including the US, the UK and Japan.

After new U.S. data last week showed inflation rose more than anticipated in August, the dollar index rose on Wednesday. Nevertheless the new numbers have failed to dispel expectations that the Federal Reserve will likely announce no change in interest rates after its meeting this week. According to Reuters and CME Group's FedWatch Tool, the market now prices in a 97% likelihood that the Fed will hold rates unchanged, up from 92% earlier on.

With a deteriorating GDP and still sky-high inflation, the Bank of England is preparing for another rate hike this week. Cracks in the economy have been visible for some time, placing the central bank in an impossible position to keep inflation under control without depressing the economy excessively.

A recent report from the Centre for Economics predicts that 7,000 businesses will collapse every quarter in 2024 as high interest rates squeeze finances and the UK economy approaches recession. The think tank suggested that pandemic debt, greater borrowing prices, and the cost of living crises will force many more retail and hospitality enterprises under than usual.

Monday 18th of September

The US NAHB/Wells Fargo Housing Market Index surprisingly dipped to 50 in August from 56 in July, the highest score since June last year. Current single-family home sales dipped to 57 from 62, and potential purchasers fell 6 points to 34. The sub-index for house sales over the next six months dropped 4 points to 59, highlighting dwindling client interest and the wider difficulty of rising shelter inflation. Analysts expect a rebound to 53 in the index this month when the results are published at 2:00 PM GMT.

Tuesday 19th of September

The Reserve Bank of Australia will release its minutes from the most recent monetary policy meeting this morning at 1:30 AM GMT. During the final meeting under Governor Philip Lowe, the bank maintained its cash rate at 4.1%, extending the rate halt for the third consecutive month in accordance with market consensus.

At 9:00 AM GMT, a final report on the Euro Area's annual inflation rate is due out. More than two and a half times the ECB's target and above the market consensus of 5.1%, the rate is expected to stay stable at 5.3% in August.

Canada's annual inflation rate increased to 3.3% in July, up from 2.8% in June and more than the 3% predicted by the market. Despite market expectations of 2.8%, core inflation (which excludes food and energy prices) remained at a 2-year low of 3.2% in July for the second month in a row. When new data is released at 12:30 PM GMT, borrowers will be hoping prices have softened, ahead of the next monetary policy meeting in late October.

US Building Permits are due to be published at 12:30 PM GMT today. According to updated figures, the number of building permits issued in the US rose by 0.1% in July, reaching a seasonally adjusted annual rate of 1.443 million. This was 13.0% lower than July of last year, suggesting that the historic increase in borrowing rates was continuing to keep housing activity at a standstill. A further drop to 1.441 million is forecast for August.

Japan's trade balance unexpectedly fell to a deficit of JPY 78.73 billion in July, missing market expectations of a surplus of JPY 24.6 billion and compared to a loss of 1,421.92 billion the year before. The new data is expected to be recorded at 11:50 PM GMT.

Wednesday 20th of September

Inflation figures for the UK are due at 6:00 AM GMT today. Following a decline in gasoline costs, the CPI fell to 6.8% in July from 7.9% in June, marking the lowest level since February 2022. The core rate was 6.9%, remaining unchanged from the data from June. These figures will have a direct impact on the Bank of Englands Monetary Policy Meeting due the following day.

The Bank of Canada will release its Summary of Deliberations to the public at 5:30 PM GMT. In September, as was widely anticipated by the markets, the bank decided on another pause in its tightening cycle and kept the target for its overnight rate constant at 5%.

The Federal Reserve is due to meet on Monetary Policy this week, with the decision released at 6:00 PM GMT and Press Conference to follow a half hour later. The unexpectedly high inflation rate posted last week increases the likelihood that the Fed will maintain flexibility in considering the possibility of raising interest rates in either November or December, but the majority of economists are expecting a pause this month with rates to remain at 5.5%.

Thursday 21st of September

The Bank of England is also due to meet on Monetary Policy this week. The banks decision will come out at 11:00 AM GMT. During its meeting in August, the bank increased its policy interest rate by 25 basis points to 5.25%, marking the 14th straight hike and driving borrowing prices to new 2008-highs. Expectations are for a further 25 basis point increase this week.

In August, the Philadelphia Fed Manufacturing Index in the US rose to +12, up from -13.5 in July and well exceeding market expectations of -10. It is the first month of manufacturing growth in Philadelphia since August 2022, and the strongest since April of the same year. A correction back to around 0 is expected for September.

The annual inflation rate in Japan remained constant in July at 3.3%, while the core rate, which excludes fresh food but includes fuel expenses, gained 3.1% year over year, easing from a 3.3% rise in June. The new data is due to come out at 11:30 PM GMT.

Friday 22nd of September

Another central bank meeting on Monetary Policy this week is the Bank of Japan. In its meeting in July, the BoJ unanimously chose to keep its benchmark short-term interest rate at -0.1% and the yield on its 10-year bonds at around 0%, but it also made the decision to make its yield curve management policy more flexible in an effort to increase the sustainability of its stimulus program. The decision statement is due to be released at 3:00 AM GMT.

UK Retail Sales are due to be released at 6:00 AM GMT today. In July, month over month sales fell 1.2%, worse than market expectations of 0.5% and following a downwardly revised 0.6% gain in June. Meanwhile sales for July fell 3.2% year over year, as the cost of living pressures and other factors impact on sales.

Flash Manufacturing and Services PMI are due for Japan, Germany, the Eurozone, the UK and the US throughout the day today. A value over fifty indicates sector expansion, while below fifty indicates decline. Policymakers and traders monitor these polls carefully since purchasing managers often have early access to corporate performance data.