EUROPEAN ECONOMICS PREVIEW: BANK OF ENGLAND POLICY ANNOUNCEMENT DUE
The Bank of England is set to announce the outcome of its monetary policy meeting on Thursday, headlining a busy day for the European economic news.
At 2.00 am ET, the European Automobile Manufacturers' Association is slated to publish Europe's new car registration data for July/August. In the meantime, August foreign trade data is due from Switzerland. The surplus totaled CHF 2.58 billion in July.
At 3.00 am ET, HICP figures are due from Austria and Slovakia.
At 4.00 am ET, gross wages from Poland and foreign trade from Italy are due. Economists forecast Poland's gross wages to climb 4 percent on year in August versus a 3.8 percent rise in July.
At 5.00 am ET, Eurostat is scheduled to issue euro area final consumer price data for August. According to preliminary estimate, consumer prices had dropped 0.2 percent annually, reversing a 0.4 percent rise in July.
At 7.00 am ET, the BoE releases the monetary policy summary and the minutes of the monetary policy committee meeting. Economists expect the bank to hold its key rate at a record low 0.10 percent and asset purchase programme at GBP 745 billion.
JAPAN OVERALL INFLATION SLOWS TO 0.2% ON YEAR IN AUGUST
Overall nationwide consumer prices in Japan were up 0.2 percent on year in August, the Ministry of Internal Affairs and Communications said on Friday - in line with expectations and slowing from 0.3 percent in July.
Core CPI, which excludes volatile food costs, sank an annual 0.4 percent - again matching forecasts following the flat reading in the previous month.
Individually, prices were down for fuel, education and recreation - while prices were higher for food, housing, furniture, clothing and medical care.
On a seasonally adjusted monthly basis, overall inflation slipped 0.1 percent and core CPI dropped 0.4
China retained its benchmark rates for the fifth straight month as the economy continued to log robust recovery from the downturn caused by the coronavirus pandemic.
The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent. The one-year and five-year loan prime rates were last reduced in April.
The one-year loan prime rate was lowered by 20 basis points and five-year rate by 10 basis points in April.
The interest rates were expected to be retained today as the rate on its medium-term lending facility or MLF, which serves as a guide for the LPR, was maintained early this month.
The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced the central bank's traditional benchmark lending rate in August 2019.
With the economy now largely back to its pre-virus path and the People's Bank of China appearing reluctant to keep monetary policy loose for longer than needed, the next move in the LPR is likely to be an increase early next year, Julian Evans-Pritchard, an economist at Capital Economics said.
With fiscal policy to remain supportive for the remainder of the year, the PBOC appears to see little need for further rate declines and has instead shifted its focus back to containing financial risks, the economist noted.
EUROPEAN ECONOMICS PREVIEW: SWEDEN CENTRAL BANK RATE DECISION DUE
The interest rate announcement from Sweden's central bank is due on Tuesday, headlining a light day for the European economic news.
At 1.00 am ET, Statistics Finland releases unemployment data for August. The jobless rate was 7 percent in July.
At 3.00 am ET, consumer confidence survey results are due from Turkey.
At 3.30 am ET, Riksbank is set to release its monetary policy report. The bank is expected to hold its key repo rate at zero percent and asset purchase programme at SEK 500 billion.
At 6.00 am ET, the Confederation of British Industry is scheduled to issue Industrial Trends survey data. The order book balance is forecast to rise to -41 percent in September from -44 percent in August.
At 8.00 am ET, Hungary's central bank is slated to announce the outcome of its monetary council meeting. The bank is set to hold its key rate at 0.60 percent.
NEW ZEALAND CENTRAL BANK HOLDS RATE; SIGNALS FURTHER EASING
New Zealand central bank central bank left its key rate and asset purchase programme unchanged on Wednesday but agreed to provide additional stimulus as the outbreak of the coronavirus in August has dented confidence among firms and households.
The Monetary Policy Committee of the Reserve Bank of New Zealand decided to hold its key Official Cash Rate at 0.25 percent and to continue with the Large Scale Asset Purchase Programme up to NZ$100 billion.
Policymakers assessed that further monetary stimulus would be needed going forward. They affirmed that the Funding for Lending Programme, or FLP, a negative OCR, and purchases of foreign assets remain under consideration.
The Committee agreed that these instruments can be mutually supportive in bolstering economic activity. Members said that the alternative instruments can be deployed independently, and noted that the FLP would be ready before the end of this calendar year.
Further, members viewed that deploying an FLP before the forward guidance period for holding the OCR ends could provide additional stimulus to the economy sooner.
The bank is expected to cut the OCR into negative territory early next year, Ben Udy, an economist at Capital Economics, said.
But the economist observed that given that the market has almost fully priced on expectation of a further 50 basis points of easing, negative rates are unlikely to drive much of a weakening in the New Zealand dollar.
Although the outbreak of Covid-19 in New Zealand appeared to be contained, the coronavirus pandemic and associated travel restrictions could have a significant long-term negative impact on the economy.
House prices had advanced recently but some policymakers noted that low population growth and rising unemployment are expected to constrain further house price increases.
The committee said the monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability.
After staying positive for much of the session till noon, the U.S. dollar turned weak and posted losses against some of its peers on Thursday.
Data released by the Labor Department this morning showed an unexpected uptick in first-time claims for U.S. unemployment benefits in the week ended September 19th.
The data said initial jobless claims inched up to 870,000, an increase of 4,000 from the previous week's revised level of 866,000. Economists had expected jobless claims to drop to 843,000 from the 860,000 originally reported for the previous week.
A separate report released by the Commerce Department showed new home sales jumped by 4.8% to an annual rate of 1.011 million in August after skyrocketing by 14.7% to an upwardly revised rate of 965,000 in July. Economists had expected new home sales to pull back by 1.2%.
The dollar index, which rose to 94.59 in late morning trades, fell to a low of 94.20 around mid afternoon and was last seen at 94.37, down slightly from previous close.
Against the Euro, the dollar firmed up to 1.627 before losing ground and slipping to 1.1689. It subsequently regained some lost ground and was hovering around 1.1670 a little while ago, netting a small loss.
The Pound Sterling was slightly firmer, fetching $1.2741, compared to $1.2726 on Wednesday afternoon.
The Yen was slightly weak at 105.42 a dollar, after recovering from 105.54.
The Aussie was stronger with the AUD-USD pair trading at 0.7045, up nearly 0.4%.
The Swiss franc was weaker against the greenback at 0.9629, down more than 0.3% from Wednesday's close, while the Loonie was firmer against the dollar at C$1.3359, gaining about 0.2%.
During their latest speeches some Fed officials' called for more fiscal stimulus. The call for fiscal stimulus and rising worries about the pace of global economic recovery amid surging coronavirus cases lifted demand for the safe-haven currency.
Fed Chair Jerome Powell said on Wednesday that the economy had a long way to go before recovery and further fiscal support is required to limit damage caused by the coronavirus pandemic.
Fed Vice Chair Richard Clarida said that the economy was still in a deep hole and policymakers "are not even going to begin thinking" about raising interest rates for now.
Switzerland's central bank retained its negative interest rates and said the expansionary monetary policy stance is needed to cushion the impact of the coronavirus pandemic on economic activity and inflation.
About high valuation of Swiss franc, the bank said it is willing to 'intervene more strongly' in the foreign exchange market, while taking the overall exchange rate situation into consideration.
Japan will on Monday release final July numbers for its leading and coincident economic indexes, highlighting a light day for Asia-Pacific economic activity.
The leading index is tipped to see a score of 86.9, up from 83.8 previously - while the coincident is pegged at 76.2, up from 74.4.
Singapore will release August numbers for import and export prices and producer prices. In July, import prices were up 7.5 percent on year and export prices tumbled an annual 7.0 percent. Producer prices were down 8.5 percent on year.
Singapore producer prices declined at a faster pace in August on a sharp fall in oil cost, data from the Department of Statistics showed Tuesday.
Producer prices decreased 9.3 percent on a yearly basis in August, following a 6.4 percent drop in July. Oil and non-oil indices were down 35.6 percent and 5.4 percent, respectively.
Month-on-month, producer prices dropped 1.2 percent versus a 0.1 percent fall in July.
Another report from the statistical office showed that import prices slid 6.8 percent annually, extending the 7.3 percent fall in July. The oil index dropped 25.3 percent and non-oil prices slid 1.1 percent.
On a monthly basis, import prices fell 0.1 percent, in contrast to the 1.9 percent rise in July.
Data showed that export prices decreased 0.6 percent on month taking the annual fall to 8.2 percent in August.
UK shop prices continued to decrease in September on falling non-food prices, data from the British Retail Consortium, or BRC, revealed Wednesday.
The shop price index dropped 1.6 percent year-on-year, the same pace of decrease as seen in August. Non-food prices decreased 3.2 percent in September compared to a decline of 3.4 percent in August. At the same time, food inflation eased to 1.2 percent from 1.3 percent in August. Fresh food inflation held steady at 0.2 percent.
Retailers are cutting prices in order to encourage further spending where sales are yet to pick up, Helen Dickinson, chief executive at BRC, said. In addition, September saw the lowest rate of fresh food inflation since 2017, which has been mostly driven by the continued availability of fresh, local food produce.
Mike Watkins, Head of Retailer and Business Insight, Nielsen, said "Looking ahead we can expect shop price inflation to remain at current low levels for the next quarter."
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