Events to Look Out for Next Week

Tuesday – 21 September 2021

• RBA Minutes (AUD, GMT 01:30) – The RBA minutes should provide guidance as to how much further the RBA members are prepared to go. In its last meeting the RBA went ahead with tapering plans, but like other central banks, it seemed eager to separate the QE outlook from rates, and Lowe also pushed back against rate hike speculation. Lockdowns will hit the economy this quarter, but the central bank expects a sharp rebound from the extended 2% contraction in Q3.
• Building Permits & Housing Starts (USD, GMT 12:30) – Housing starts should climb to a 1.580 mln pace from 1.534 mln in July and 1.650 mln in June, versus a 15-year high of 1.725 mln in March. Permits are expected to improve to 1.660 mln from 1.635 mln in June, versus a 15-year high of 1.883 mln in January.

Wednesday – 22 September 2021

• Interest Rate Decision, Monetary Policy Statement (JPY, GMT 03:00 – 06:00) – The BoJ is expected to leave rates and asset purchases unchanged after BoJ head Kuroda in his latest remarks stressed downside risks, and the economic outlook was cut back with the bank expecting a more volatile recovery path amid high virus uncertainty. Kuroda keeps stressing the uncertainty for the economic outlook. The BoJ will firmly continue monetary easing and will extend special programs if necessary.
• Interest Rate Decision, Monetary Policy Statement and Press Conference (USD, GMT 18:00-18:30) –This week’s data. i.e. stronger than expected retail sales, a jump in the headline Philly Fed, and the weaker than expected CPI data, helped trigger some profit taking heading into next week’s FOMC meeting, and injected some angst as the data were seen raising the risk that the Fed announces QE tapering sooner than later.  However the FOMC is expected to remain on hold next week, maintaining its zero-rate posture while making no announcement of QE tapering. This scenario has been reinforced by the optics of the weakness in the August jobs report and the slippage in CPI. Chair Powell recently said that though the labor market has improved considerably and the outlook has brightened, “substantial slack” remains. And the Delta variant is adding downside risk. Meanwhile, prices are easing from some of the reopening pressured, supply constrained sectors, as expected, including airline fares and used vehicle prices. But the outlook is muddled. There are still persistent gains in many key components, including housing, food, and fuel/utilities. And of note, the NY Fed’s Survey of Consumer Expectations showed short- and medium-term inflation expectations climbed to new all-time highs in August of 5.2% for the 1-year measure and 4.0% for the 3-year horizon. Uncertainties over the price path were seen in the June FOMC minutes where several participants noted downward bias in inflation was still a real possibility.The combination of these uncertainties should keep policy and guidance on hold.

Thursday – 23 September 2021

• SNB Interest Rate Decision and MPA (CHF, GMT 07:30) – Swiss Seco stated this week that recovery sees temporary loss of momentum. Switzerland’s State Secretariat for Economic Affairs (SECO) said it has lowered its growth forecast (adjusted for sporting events) to 3.2% for this year, rising to 3.4% in 2022. Seco said “the economic recovery is set to continue as expected, though growth is initially less dynamic than forecast previously”. The SNB already signalled that negative rates remain necessary to keep the currency under control and today’s forecast revisions will add to the arguments for an unchanged policy announcement next week.
• Markit Services and Composite PMIs (EUR, GMT 07:30-08:00) – The prelim. EU Markit PMI Indices are expected to continue above 50, but slightly decline, which could result in a composite PMI for September at 58.8 from 59.
• Markit Services and Composite PMIs (GBP, GMT 08:30) – The prelim. UK Markit Service PMI Indices is expected to hold unchanged.
• Interest Rate Decision, Monetary Policy Statement and MPC Voting (GBP, GMT 11:00) – The BoE already signaled a slightly more hawkish shift on the rate outlook at the previous meeting, and the new chief economist could add another layer to this. Sterling markets in particular seem to banking on an increasingly hawkish BoE and this week’s data releases have added to the arguments of the hawkish camp at the BoE. Data have showed that the UK economy remains on an expansionary path, on round of stronger inflation and labour market reports. Hence the BoE is not expected to proceed with any interest rate actions but MPC voting is expected to show support for a potential rate hike.
• Retail Sales (CAD, GMT 12:30) – July Retail sales are anticipated to decrease at 4.4% m/m wit core to increase to 4.4% m/m.
• Markit Services and Composite PMIs (USD, GMT 13:45) –The prelim. US Markit Service PMI for September is seen higher at 59.5, after the 55.1 in the final read for August, while the composite index is seen at 58.3 from 55.4 amid a rise also in Manufacturing sector.

Friday – 24 September 2021

• IFO Business Climate, Assessment & Expectations (EUR, GMT 08:00) – The German IFO business reading is expected to decline slightly to 98.9 in September from 99.4.
• Fed Chair Powell Speech (USD, GMT 14:00)