Major market-moving events and data releases are currently in a lull, and we have a quiet start to the week, with no significant economic announcements on the docket until Wednesday.
From Wednesday onwards, prepare for an acceleration in economic activity. Key releases to watch for include the US Consumer Price Index (CPI) and Core CPI, which will provide insights into inflation trends and potentially influence the Federal Reserve's monetary policy decisions. Across the pond, the UK's Gross Domestic Product (GDP) quarter-on-quarter data will shed light on the health of Britain's economy, impacting both equities and the GBP currency pairs.
Stay tuned for a deep dive into the nuances of the week's economic events!
🇺🇸 EIA Crude Oil Stocks Change
At 17:15 GMT+3 on Wednesday, all eyes in the trading community will turn to the release of the Energy Information Administration's (EIA) Crude Oil Stocks Change in the United States. This report is a key bellwether for energy market trends, providing insight into the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have significant impacts on inflation, exchange rates, and governmental policy.
A decrease in the US oil inventories often leads to a surge in Brent Crude Oil prices due to the perception of scarcity. Conversely, an increase in crude oil stocks suggests an oversupply, which can lead to a decrease in oil prices and potentially depress the value of oil and gas equities.
🇺🇸 CPI & Core CPI m/m
Following the EIA Crude Oil Stocks Change release on Wednesday, market participants should prepare for the next significant event on the calendar – the Consumer Price Index (CPI) and Core CPI release, scheduled on Thursday for 15:30 GMT+3. These important indicators offer valuable insights into inflationary trends in the US economy, which have far-reaching implications for the markets.
Economists have forecasted the overall CPI m/m to remain unchanged at 0.2%, consistent with the previous month's reading. However, the Core CPI, which excludes the volatile food and energy components, is projected to see a slight uptick to 0.4% m/m, exceeding the forecast. Such an increase could potentially bolster the US Dollar due to the prospect of accelerated inflation, which may spur speculation of more aggressive interest rate hikes by the Federal Reserve to curb rising prices.
🇬🇧 GDP q/q
Rounding out the week's economic calendar, at 9:00 GMT+3 on Friday, August 11, we turn our focus to the United Kingdom as the Gross Domestic Product (GDP) quarter-on-quarter (q/q) figures are released. The GDP q/q is a key indicator of economic health and provides a comprehensive snapshot of the UK's production and growth.
Analysts predict that the quarterly GDP will remain flat, demonstrating no growth with a forecast of 0.0%, which is a slight dip from the last reading of 0.1%. This prediction aligns with the Bank of England's recent interest rate hike, indicating cautious monetary policy amid stagnant economic growth. The GDP year-on-year (y/y) figures are expected to remain at 0.2%.
The implications of this report for the British Pound and UK stocks could be substantial.
🇺🇸 PPI & Core PPI m/m
Concluding this week's data releases at 15:30 GMT+3, we have the US Producer Price Index (PPI) and Core PPI month-on-month (m/m) announcements. As crucial inflationary indicators, they measure the average changes in selling prices received by domestic producers for their output. These indices serve as a leading indicator of consumer price inflation, and their readings can play a significant role in shaping market trends.
The values of the PPI and Core PPI have wide-ranging implications for various assets. A higher-than-expected reading could potentially signal rising inflation, which might prompt speculation about a more aggressive stance on interest rates by the Federal Reserve. This speculation can lead to an appreciation of the US Dollar as higher rates attract foreign investors seeking higher return on their investments.
That's it for this week! 👋
