Week ahead: 11-15 September

Monday

UK

An appearance from Bank of England member Pill on Monday dominates an otherwise quiet day. Recent comments from Pill allude to a relatively hawkish outlook noting that core inflation pressures are yet to abate. His warnings over potential a secondary inflation search brought sterling gains. Just keep an eye out for any fresh commentary that could move GBP.

Tuesday

UK

The UK’s economic health will be in focus on Tuesday. The July jobs report should shift sentiment around the BoE outlook, with a particular focus on wage data owing to its role as an inflation proxy. In June, average weekly earnings rose by a record 7.8%, primarily due to NHS staff’s bonus payments. However, there was an increase in unemployment to its highest level since October 2021 at 4.2%. With recent PMI weakness causing consternation around the health of the economy, any sharp uptick in unemployment or the claimant count could weaken the pound on shifting rate hike expectations.

Associated British Foods

Q4 results for Associated British Foods will be reported. Despite challenging retail conditions, shares of the Primark owner have climbed 21% year-to-date. The company’s performance is closely watched, as it reflects trends in the retail sector and consumer behavior. Any insights into its performance and future guidance can impact investor sentiment and potentially affect the broader retail industry.

Wednesday

UK

The UK’s Gross Domestic Product (GDP) data for July will be released. Earlier in the month, the Office for National Statistics revised its GDP calculations, showing that the UK’s economy performed better than previously thought, even outperforming Germany’s. The data also highlighted the role of the services sector in driving the recovery. July’s GDP figures are expected to be flat at 0% growth. Any particular weakness could damage the pound given the growing narrative around a belated contraction in the UK owing to higher interest rates.

US

Wednesday’s highlight is the US Consumer Price Index (CPI) report for August. In July, US consumer prices rose by 3.2% year-on-year, up from 3% in June. The uptick in headline CPI was partly due to base effects, with the July 2022 0% reading dropping out. The same is expected this time around, with the 0.1% monthly reading from last August being replaced. As such, there is likely to be a greater focus on the monthly figure, with anything above 0.2% signalling an annualized reading above 3%. Also watch out for the core inflation figure, which is expected to continue its gradual decline towards target. The past two months have seen 0.2% monthly readings, marking a significant shift from the regular 0.4% to 0.6% gains seen over the 10-months prior. With a 0.6% August 2022 figure being replaced, it looks likely that we will see the annual reading head lower to the potential detriment of the dollar.

Adobe

Adobe will report its Q3 results. The company has had a solid quarter, with its shares reaching their highest levels since January 2022. The optimism is partly driven by strong numbers in Q2 and expectations regarding the growth of Adobe’s AI products. Investors and traders will be interested in both the financial results and any forward-looking guidance provided by the company.

Thursday

Australia

A host of economic data points out of Australia shine a light on the economy at a pivotal time. Concerns around the impact of a Chinese credit and real estate crisis have dented sentiment for AUD. With that in mind, any weakness in the jobs market could damage the Aussie dollar. On the inflation-front, watch out for the consumer inflation expectations figure.

Eurozone

The European Central Bank’s interest rate meeting will be a significant event. The ECB is expected to face a divided council regarding whether to raise interest rates this month. Inflation rates and economic conditions vary across the Eurozone, with some members advocating for further rate hikes while others emphasize restraint. With that in mind, the decision to continue or finally halt the rate hike phase will be a key driver of market volatility. ECB President Christine Lagarde’s remarks and the decision will be closely scrutinized, with the outlook likely to remain guarded given the potential for a secondary inflation surge.

Friday

China

Several key economic indicators for August will be released, including the housing price index, industrial production, retail sales, and the unemployment rate. These data points offer insights into the health of China’s economy, especially given recent concerns about slowing growth. Traders will focus on whether retail sales and industrial production show improvement, as well as any developments in the youth unemployment rate. The People’s Bank of China (PBoC) will announce its decision on the 1-year medium-term lending facility rate. The central bank’s decision can have a direct impact on borrowing costs and liquidity in the Chinese financial system, influencing investor sentiment and market dynamics.