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    Week Ahead – Inflation data to come in focus but China trade data also eyed

    Inflation data will be the dominant data theme in the coming week as CPI figures are published for the United States, United Kingdom, China and the Eurozone. Industrial production will also come into focus as data is due from the US, Japan and the Eurozone, as well as Chinese trade data. The start of the week is expected to be fairly quiet though as Japan, Canada and the US markets are closed for national holidays.

    After this week’s Bank of England meeting minutes sounded more dovish than some had anticipated, next week’s inflation and unemployment data will be watched closely on signs of any spillover effects on the UK economy from the recent global developments. September CPI out on Tuesday is forecast to remain at 0.0% as with the prior month. The core rate is forecast to edge up to 1.1% y/y from 1.0%. No change is expected in the unemployment rate on Wednesday with the August rate expected to remain at 5.5%. Wages growth is however expected to continue to strengthen with average weekly earnings including bonuses forecast to rise to 3.1% y/y.

    In the Eurozone, the ZEW economic sentiment survey for Germany should provide some further insight into the outlook for the German economy after recent data showed weakening exports and industrial output. The ZEW survey index out on Tuesday is forecast to worsen to 7.0 in October from 12.1 previously. Eurozone industrial production data on Wednesday is not expected to be positive either. Industrial production in the euro area is forecast to shrink by 0.6% m/m in August. On Friday, the final September CPI data for the Eurozone is not expected to show any revision. The Eurozone fell back into deflation in September with prices decreasing by 0.1% annually, raising expectations that the European Central Bank might expand or extend its quantitative easing program by the end of the year.

    It will be quite a busy week for US data, starting off with retail sales on Wednesday. September retail sales are forecast to increase by 0.3% m/m, a slight acceleration from August’s 0.2%. Inflation data is due on Thursday, with September CPI expected to slip into negative territory to -0.2% y/y, adding support to the argument for a rate rise to be delayed to 2016. But the core rate is forecast to stay at 1.8% y/y for the fourth consecutive month. Friday will see the release of industrial production data, which is expected to increase by 0.1% m/m in September. The JOLTS job openings for August and the University of Michigan October confidence survey are also released on Friday.

    In Asia, the main focus will be on Chinese data. China is expected to publish trade figures on Tuesday with exports forecast to show another drop in September. After falling by 5.5% in August, exports are estimated to have decreased by 6.3% y/y in September. But more worryingly for countries that export to China, imports are forecast to have dropped by 15.0% y/y. On Wednesday, inflation data is released with September CPI forecast to ease slightly to 1.8% y/y.

    Finally, investors will get the chance on Tuesday to analyse the Bank of Japan minutes from its last meeting for any signs of further easing in the coming months. However, the Bank of Japan is unlikely to reveal too much ahead of its updated half-yearly forecasts and another meeting at the end of the month.

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