USD Stays Strong: Can Next Week’s Data Fuel More Gains

Tuesday, 15 October 2024, 14:30 – Canada CPI (YoY)(Sep)

The latest release of Canada’s Consumer Price Index (CPI) for August 2024 showed a year-over-year increase of 2.0%, down from the previous 2.5% in July. The figures landing on the Bank of Canada’s target for the first time since 2021, leaving the door open for more aggressive interest rate cuts. The decrease was driven by lower housing and energy sector price which have seen some relief from earlier inflationary pressures. With the ongoing fluctuations in prices, market expectations suggest inflation may stay around 2% on the upcoming data.

Tuesday, 15 October 2024, 23:45 – New Zealand CPI (YoY) (Q3)

The New Zealand CPI for Q2 showing an annual inflation rate of 3.3%, down from the previous 4.0% and also slightly below the forecast of 3.5%. The continued decrease in inflation reflects the cooling of the economy as price pressures ease, largely influenced by a moderation in energy prices and softer domestic demand. Despite this, inflation remains above the Reserve Bank of New Zealand’s (RBNZ) target range of 1-3%. The RBNZ’s focus remains on achieving sustainable price stability, and further rate decisions will be data-dependent, particularly as inflation continues to approach the target range. The upcoming data is expected to reflect ongoing downward trend although it may above the lower bound of the RBNZ’s target range due to persistent cost-of-living pressures and global economic uncertainty.

Thursday, 17 October 2024, 14:15 – ECB Interest Rate Decision (Oct)

The latest European Central Bank (ECB) interest rate decision, as of September 2024, resulted in a rate cut aimed at addressing weakening economic growth in the eurozone and moderating inflation. The ECB lowered its deposit rate to 3.65% from 4.25% as expected by the market and signaled that it would maintain a restrictive policy stance until inflation falls closer to the 2% target. This move followed signs of softening inflationary pressures, particularly in the services sector, which had previously been resistant to price reductions. There is speculation that the ECB may opt for another rate cut, although some analysts predict this may be delayed until December.

Thursday, 17 October 2024, 14:30 – US Retail Sales (MoM) (Sep)

The U.S Retail Sales for August 2024 showed a modest growth of 0.1% month-over-month While the figure was lower than previous reading 1.1%, it exceeds market expectation of -0.2%, indicating steady but moderate growth across the retail sector, especially non-store retailers. Key drivers behind the slight monthly uptick include strong performances in sectors like non-store retail and food services. However, several categories such as apparel and electronics showed weaker demand, reflecting cautious consumer spending as inflationary pressures persist. Despite this, with upcoming holiday promotions, the upcoming data is expected to reflect a marginal increase, potentially around 0.2% – 0.4% as consumers continue to navigate the challenging economic landscape.