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FX Week Ahead: GDP, Inflation and Unemployment Data

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Economic data for the week ahead will focus on the key indicators across some of the major economies. With last week’s RBNZ and BoE meetings, the central bank meetings take a back seat. GDP, inflation and unemployment reports remain the key themes for the week ahead. The data could play an important role in shaping the market outcome on the next monetary policy move by the respective central banks.

The RBA will be releasing its monetary policy meeting minutes from the recently concluded event. In the UK, the BoE’s inflation report hearings get underway mid-week.

On the economic front, GDP reports from the Eurozone, Germany and Japan will be coming out this week. Inflation data will cover the Eurozone and Canada while the monthly labor market data will be released for Australia and the United Kingdom.

Data from the U.S. will see the release of the monthly retail sales report and building permits data along with some regional manufacturing index releases.

Here is quick recap of the markets this week.

GDP Reports and Inflation

The GDP reports this week will cover that of Germany, the Eurozone and Japan. The GDP reports for Germany and Eurozone mark the second revised GDP estimates for the first quarter ending March 2018.

Preliminary GDP reports for the Eurozone showed that the economy advanced just 0.4% on the quarter which was at a slower pace compared to the 0.7% increase seen in the last quarter of 2017. No changes are expected as economists forecast that the second revised GDP will confirm that the Eurozone economy advanced at a slower pace.

Data from Japan will see the preliminary GDP release for the first quarter of this year. Japan’s economy has been chugging along at a stable pace so far but the first quarter forecasts point to a flat change on the quarter. This comes after Japan’s economy was seen advancing 0.4% in the three months ending December 2017.

Inflation data will also be another key data point to watch this week. Inflation data will cover the Eurozone and Canada. Consumer prices in the Eurozone, as seen by the flash estimates showed that while headline CPI increased, core CPI fell below 1.0%. A confirmation of this could potentially delay the ECB’s plans to cut down on its QE purchase program which is expected to end this December.

Unemployment data: UK and Australia

The UK’s monthly labor market data will be coming out this week, covering the three months ending April. According to the economists polled, the UK’s unemployment rate is expected to remain unchanged at 4.2%. The three month average earning is expected to rise 2.7% which marks a slower pace of increase on the year compared to the 2.8%. The average earnings including bonuses are expected to rise 2.9% which marks a higher pace of increase at 2.8%.

From Australia, the average wage price index data will be coming out on Wednesday. The average wage price index is forecast to rise 2.1% on the year.

This marks the same pace of increase compared to the previous month. On a quarterly basis, the wage price index is forecast to rise 0.6% on the quarter. This marks a higher pace of increase compared to 0.5% in the previous quarter.

The RBA will also be releasing its meeting minutes ahead of the unemployment data. The meeting minutes mark the monetary policy meeting held few weeks ago where interest rates were left unchanged.


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