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Week Ahead – China data and Eurozone Q3 GDP to be the main focus

Central banks will take a backseat next week as attention turns to China for the latest economic indicators out of the country. Trade data, retail sales and industrial production figures will be some of the data released in China next week. Third quarter GDP data out of the Eurozone will also be closely watched as the European Central Bank ponders whether to provide additional monetary stimulus when it meets next month.

Starting the week on Sunday will be the latest trade data from China. Exports are forecast to fall at a slower pace in October, with the rate of decline falling to -3.0% y/y, versus -3.7% y/y in September. Imports will continue to fall in double digits though with the rate of decline slowing from -20.4% y/y to -16.0% y/y in October. Next from China will be the October CPI reading on Tuesday, which is forecast to ease slightly to 1.5% from 1.6%. The moderation in China’s inflation rate in the past two months should provide the People’s Bank of China more room for further rate cuts. On Wednesday, industrial production figures for October are released along with retail sales and fixed-asset investments. Industrial production is expected to improve slightly to 5.8% y/y, while retail sales are forecast to stay unchanged at 10.9% y/y. Fixed-asset investments, which fell to a 14-year low in September, is expected to ease further in October to 10.2% y/y.

The US will have a lighter calendar next week with the JOTS job openings on Thursday and retail sales on Friday to be the highlights. Retail sales are expected to rise by 0.2% m/m in October, maintaining the moderate pace of recent months. Also to watch out for the US will be the upcoming speeches by Fed officials from Charles Evans and William Dudley on Thursday.

In the Eurozone, German trade figures for September are due on Monday. Recent data has pointed to a deterioration in German manufacturers’ output but exports are forecast to have expanded by 2.1% in September, following a 5.2% drop in August. On Wednesday, ECB President Mario Draghi might provide further clues on ECB policy when he speaks at a Bank of England forum in London. While on Thursday, Eurozone industrial production data is expected to show euro area output rising modestly by 0.1% m/m in September after declining by 0.5% the prior month. The big mover for the euro though is likely to be Friday’s flash Eurozone GDP data. The Eurozone economy is forecast to have expanded by 0.4% in the third quarter, same as the second quarter. A weaker reading would likely heighten expectations of further stimulus by the ECB in December.

Over in Japan, industrial data will also be eyed as policymakers assess the impact of the slowdown in emerging markets on world trade. Japanese trade numbers for September are released on Tuesday and final industrial production figures are published on Friday. But the closely watched machinery orders will likely be the main focus on Thursday. Machinery orders are expected to have risen by 3.3% m/m in September after dropping 5.7% m/m in August.

In Australia, the NAB business confidence survey on Tuesday and employment data on Thursday could move the aussie, which has firmed recently on improved domestic outlook. However, its New Zealand counterpart has come under renewed pressure on weak dairy prices. Comments by RBNZ Governor Graeme Wheeler could impact the kiwi when he speaks at a press conference on Tuesday, which will follow the publication of the half yearly financial stability report.

The UK will have a quieter week with the only major release being the latest employment data. The unemployment rate is forecast to fall to 5.3% in the three months to September, while average earnings growth should quicken to 3.2% from 3.0% in the previous three months. Investors might choose to ignore a strong reading after the Bank of England indicated on Thursday it is in no hurry to raise rates. There will be more from BoE Governor Mark Carney next week when he speaks before the Parliament’s Treasury Committee on Tuesday about the November inflation report.

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