Germany ZEW Economic Sentiment (**)
On Tuesday, German research institute ZEW will release its Economic Sentiment Index, which touches upon the six-month economic outlook. A level above zero suggests optimism. The gauge is compiled from a poll of about 350 German institutional investors and analysts. A higher-than-expected reading should be interpreted as a bullish signal for the EUR. Economists expect the indicator to slow down to 20 from 22.3 in October.
Producer Price Index (PPI) m/m (***)
The US Labor Department’s Producer Price Index (PPI) analyzes the change in the price of goods sold by manufacturers. It is one of the main indicators to assess consumer price inflation, which accounts for the greatest part of overall inflation. A higher PPI figure would force the Federal Reserve to seriously consider increasing the interest rate earlier than initially planned, and thus should be treated as a bullish signal for the greenback.
In September, the index increased by 0.5%, and economists now expect it to have accelerated to 0.6% in October.
Core CPI m/m (***)
Wednesday will be an important day for the US dollar, as the Labor Department will release the consumer price index (CPI) and the Core CPI for October, which is the most important inflation gauge.
The Core CPI figure measures the changes in the price of goods and services without taking into account food and energy items.
In September, the Core CPI accelerated by 0.2% and economists anticipate that the index had increased by 0.4% last month. That means a 4.3% increase on an annual basis, up from 4% in September.
Economists and the Fed will watch Wednesday’s data very closely to see whether the inflationary pressure is extending beyond sectors most impacted by pandemic-related disruptions.
As for the standard CPI measure, Wall Street economists expect it to have increased by 5.8% last month compared to October 2020, which would suggest the highest surge since 1990.
The CPI data will likely intensify the debate whether high inflation is transitory or is here to stay until the Fed doesn’t give up its dovish stance.
Jobless claims (**)
The US Labor Department will publish its weekly report on initial applications for unemployment benefits, which usually comes on Thursday. Economists anticipate a slowdown to 265,000 new claims after 269,000 applications in the previous week.
Employment Change (***)
The Australian Bureau of Statistics (ABS) will publish the employment change data, which measures the change in the number of workers. Analysts expect that the number of employed had increased last month by 50,000, after tumbling by 138,000 in September. A higher-than-expected reading can be treated as a bullish signal for the Aussie.
Unemployment Rate (**)
Separately, the ABS will release the unemployment rate for October, which is expected to have increased to 4.7% from 4.6% in September.
GDP q/q & y/y (***)
Thursday will again be a volatile day for the pound. Next week, the Office for National Statistics (ONS) will publish the preliminary data related to growth in the gross domestic product (GDP) during the third quarter of 2021.
The GDP measures the annualized change in the inflation-adjusted value of all goods and services produced by a country’s economy.
Monthly numbers suggest that UK GDP grew only 0.1% in July compared to June, followed by a 0.4% increase in August, which means a slowdown in Q3 compared to the previous three months. Analysts expect the UK economy to have increased 1.5% in Q3, slowing from the 5.5% reported in Q2, when the GDP was driven by the normalization of economic activity.
After bleeding last week following the Bank of England’s decision not to raise the interest rates, the pound can attempt a recovery on upbeat GDP data.
Manufacturing Production m/m (**)
Separately, the ONS will release its Manufacturing Production data for September, which measures the change in the total inflation-adjusted value of output produced by manufacturers. In the UK, manufacturing accounts for about 80% of overall Industrial Production.
Economists expect the indicator to show 0.1% growth in September, after surging by 0.5% in August.
ECB Forecast (***)
Later on Thursday, investors will monitor the European Central Bank’s (ECB) outlook for the eurozone, which will touch upon macroeconomic projections related to GDP and inflation.
JOLTs Jobs Openings (**)
On Friday, USD traders will monitor the Labor Department’s results of its survey that reflects job vacancies. The survey collects data from companies about their employment, job openings, recruitment, hires, and separations. JOLTS considers Job Openings as all positions that are open (not filled) on the last business day of the month.
Economists anticipate that the reading had increased from 10.43 million in August to 10.92 million in September.
A better than anticipated figure is considered to be bullish for the American currency.