Economic calendar: Day with inflation readings

Summary:

• The UK price growth expected to push moderately higher

• The US headline CPI inflation seen accelerating to 2.5% YoY

• EMU GDP report may spur volatility on EUR tied FX pairs

Wednesday is definitely the most interesting day of the week in terms of macroeconomic readings. Investors will be served inflation readings from some of the World’s most developed economies therefore one should prepared for increased volatility on some of the G10 currencies. Apart from that, preliminary GDP report for Q3 from euro area will be published in the morning. Last but not least, API inventories estimates will be released in the late evening.

8:30 am GMT - Sweden, CPI inflation for October. The latest data from the Swedish economy was rather mixed. PMIs and industrial production data deteriorated while retail sales and inflation came in above market expectations. As money market sees around 50% chance of a rate hike during December’s meeting another solid inflation reading may encourage Riksbank to act.

9:30 am GMT - UK, CPI inflation for October. The UK labour market report released yesterday showed another month of solid wage growth. Such development should cause inflationary pressures in the UK economy to mount and may ultimately cause the UK central bankers to opt for a rate hike. However, one should be aware that it seems unlikely that we will see any monetary move before complete Brexit deal is presented.

10:00 am GMT - Eurozone, GDP report for Q3. Despite data from the eurozone being mixed, Mario Draghi kept repeating that the European economy is strong and developing properly. Investors will have a chance today to see if he was right. Market consensus points for a reading of 1.7% YoY. Note that the German reading showed a 0.2% QoQ contraction, the worst reading since mid-2014.

1:30 am GMT - US, CPI inflation for October. The Federal Reserve continues its gradual rate hike approach and does not seem to be concerned by weaker data surfacing from time to time. Strong labour market report and another better reading of services ISM is definitely a reason to cheer but one should remember that major goal of developed countries’ central banks is maintain price stability. Having said that, investors should pay double attention to today’s inflation reading as this kind of data has the biggest impact on monetary policy decisions.

9:40 am GMT - API weekly crude oil stocks. The oil inventories data is released with a one-day lag this week due to the Veterans’ Day federal holiday in the United States on Monday. After a stunning rally in the first half of the year oil market is experiencing a stunning decline. As concerns over potential deficit on the market abated investors rushed to sell overpriced commodity. In turn Brent is trading around 25% below 2018’s peak. As sentiment looks to be clearly bullish a oil may need a strong impulse from data to halt declines.

Central bank speakers scheduled for today:

• 3:00 am GMT - Fed’s Quarles

• 11:00 pm GMT - Fed’s Powell

EURUSD recently broke below its prior support area around 1.13 handle. Nevertheless, the pair managed to climb back to the vicinity of the aforementioned zone yesterday. The outcome of today’s macroeconomic readings may be crucial for whether we see a break higher or a pullback. Source: xStation5