This week brings significant economic indicators and company earnings reports that will shape market expectations. On Wednesday, October 9, the Reserve Bank of New Zealand’s decision to cut the Official Cash Rate will be closely scrutinized for its impact on inflation and the NZD. Thursday sees the release of US Consumer Price Index (CPI) data, a key gauge of inflation, while Friday’s GDP report from the UK and Canadian employment data will provide further insights into global economic health. Additionally, major earnings releases, including Costco, Delta Air Lines, JPMorgan Chase, and Wells Fargo, will also influence investor sentiment heading into the weekend.
High Impact Economic Events
Wednesday 04:00 am (GMT+3) – New Zealand: Official Cash Rate (NZD)
Thursday 15:30 (GMT+3) – USA: CPI m/m (USD)
Friday 09:00 am (GMT+3) – UK: GDP m/m (GBP)
Friday 15:30 (GMT+3) – Canada: Employment Change (CAD)
Friday 15:30 (GMT+3) – USA: PPI (USD)
Wednesday, October 9
04:00 am – New Zealand: Official Cash Rate (NZD)
The Reserve Bank of New Zealand (RBNZ) reviews its interest rate policy every six weeks, setting the rate at which loans are provided to commercial banks. This rate is a key instrument of the RBNZ’s monetary policy, aimed at managing the strength of the New Zealand dollar (NZD). A rate increase typically strengthens the NZD by attracting foreign capital and boosting demand for the currency. Consequently, market participants closely monitor changes in the interest rate to determine their potential impact on NZD performance.
The Reserve Bank of New Zealand reduced the Official Cash Rate (OCR) by 25 basis points to 5.25%, as inflation trends return towards the target range of 1-3%. Inflation expectations, pricing behavior, and various core inflation measures align with stable, low inflation. While economic growth remains below trend and global inflation is easing, imported inflation has declined to pre-pandemic levels. Services inflation is still high but expected to decrease as economic capacity improves. Future easing will depend on inflation expectations remaining anchored around the 2% target.
Analysts see a rate cut of 50 basis points.
Thursday, October 10
15:30 – USA: CPI m/m (USD)
The Consumer Price Index (CPI) measures the change in prices paid by consumers for a basket of goods and services, reflecting spending patterns of urban consumers and wage earners. It includes indexes like CPI-U for all urban consumers and CPI-W for urban wage earners, covering over 90% of the US population. CPI tracks inflation by comparing current prices to a reference base period.
In August 2024, the Consumer Price Index (CPI) rose 0.2%, matching July’s increase. Over the past year, the index increased by 2.5%, the smallest rise since February 2021. Shelter costs led the rise, increasing 0.5%, while food prices were up 0.1% and energy prices fell 0.8%. Excluding food and energy, the index rose 0.3%.
Analysts predict a 0.1% reading.
Friday, October 11,
09:00 am – UK: GDP m/m (GBP)
Gross Domestic Product (GDP) measures a country’s economic size and health over time, typically quarterly or annually. It can be calculated by totaling the value of goods and services produced, income earned, or spending. Household spending is the largest component, making up about two-thirds of GDP. Growth in GDP signals an expanding economy, but it doesn’t capture all aspects of economic well-being.
The UK’s real GDP grew by 0.5% in Q2 2024, revised down from an initial estimate of 0.6%. Year-on-year, GDP increased by 0.7%. July 2024 showed no economic growth, with gains in services offset by declines in production and construction.
Economists expect growth of 0.2%.
15:30 – Canada: Employment Change (CAD)
Change in the number of employed individuals in the previous month. In general, when the actual figure is greater than the forecast, it is positive for the currency.
In August, employment saw little change, with a modest increase of 22,000 jobs (+0.1%), while the unemployment rate rose to 6.6%. Employment grew notably among core-aged women and in sectors like education, healthcare, and finance but declined in services, professional sectors, and utilities. Wages increased 5.0% year-over-year, with average hourly earnings at $35.16.
Economists anticipate an increase of 34.6K jobs.
15:30 – USA: PPI (USD)
The Producer Price Index (PPI) measures the average change in prices received by producers for goods, services, and construction. The PPI covers a broad range of industries and is used alongside other economic indicators like the Consumer Price Index (CPI), which measures price changes from the buyer’s perspective. Growth in the index can have a positive effect on dollar quotes.
In August, the Producer Price Index (PPI) for final demand increased by 0.2%, following no change in July. Over the past 12 months, the PPI rose by 1.7%. The increase was driven by a 0.4% rise in prices for final demand services, while prices for goods remained unchanged. Excluding food, energy, and trade services, the PPI rose by 0.3% in August and 3.3% over the year.
Economists project a modest increase of 0.1%.
Company Earnings (October 7 – 11)
Wednesday, October 9: COST (Costco Wholesale Corp)
Thursday, October 10: DAL (Delta Air Lines, Inc.)
Friday, October 11: JPM (JPMorgan Chase & Co)
Friday, October 11: WFC (Wells Fargo & Co)
Conclusion
In conclusion, this week’s economic data releases and earnings reports are expected to provide critical insights into global economic conditions and influence market direction. The Reserve Bank of New Zealand’s decision on the Official Cash Rate will play a pivotal role in shaping inflation expectations, while the US CPI and PPI figures will offer key data points on inflationary trends in the world’s largest economy. Additionally, the UK’s GDP and Canada’s employment figures will shed light on the economic trajectory of major economies. When combined with key corporate earnings, these factors are likely to drive investor sentiment and market positioning in the near term.