🔥 This week’s economic calendar is busy with updates on the initial and continuing jobless claims, retail sales data, and consumer sentiment – although the primary focus will be on hot reads on inflation with the producer prices report and consumer prices report due in.
📣 Upcoming economic events can significantly affect assets such as $USD, $US stocks, $GBP, $FTSE100 and others.
👇 So, let’s take a look at this week’s recap in more detail.
UK Gross Domestic Product (GDP) – Wednesday, October, 12th
The UK Gross Domestic Product (GDP) will be released at 9:00 (GMT+3) on Wednesday, October 12.
GDP is a measure – or an attempt to measure – all the activity of companies, governments, and individuals in a country.
Most economists, politicians, and businesses like to see GDP rising steadily because rising GDP usually means people spend more, more jobs are created, more tax is paid and workers get better pay rises.
Asset(s) Affected: $GBP and $FTSE100 🇬🇧
Why is this event important?
It is the main financial indicator of the country, which shows the vector of economic development and affects the main assets, including the national currency and stocks of major British companies.
📈 If GDP goes up, the economy is generally thought to be doing well. This is a positive signal for the main stock indices of the country. At the same time, the national currency may react in different ways, depending on the mood of financial market participants.
📉 If GDP is falling, then the economy is shrinking – bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs. Firstly, the decline in GDP this time could mean extreme negativity for the British stock market.
The United States Producer Price Index (PPI) – Wednesday, October, 12th
On Wednesday, October 12, the United States Producer Price Index (PPI) will be released at 15:30 (GMT+3).
The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
PPI’s are seen as advanced indicators of price changes throughout the economy, including changes in the prices of consumer goods and services.
📈 A rising PPI could indicate that consumer prices could rise, leading to higher interest rates. The increase in interest rates stimulates the demand for that currency as investors chase yield. This inflow of capital results in a higher USD exchange rate. However, the rise in PPI could have a negative effect on U.S. stocks.
📉 A declining PPI that is typical of deflationary periods tends to signal an upcoming economic slowdown in a country. Benchmark interest rates set by central banks also usually come down during low or negative inflationary periods to make borrowing less costly. This leads to an increase in business activity.
FOMC Meeting Minutes – Wednesday, October, 12th
On Wednesday, October 12, the FOMC Meeting Minutes will be held at 21:00 (GMT +3).
The FOMC meeting minutes provide a detailed summary of the FOMC discussion and inform the public and Congress about the full range of policy-makers views and debates about monetary policy issues, including the diversity of views.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
The minutes offer more granular detail on the process and reasoning behind certain policy actions, such as the views of specific Fed members and deeper perspectives on the U.S. economic picture and overall Fed balance sheet.
❗ For traders, FOMC meetings are a time of particular volatility because any change in federal fund rates can affect a range of economic variables such as short-term interest rates, foreign exchange rates, long-term interest rates, employment output, and prices of goods and services.
U.S. Consumer Price Index (CPI) – Thursday, October, 13th
The U.S. Consumer Price Index (CPI) will be released on Thursday, October 13 at 15:30 (GMT+3).
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
Excessive inflation poses a danger to economic growth and can also hit the prices of financial assets, stocks as well as bonds. The CPI allows investors to curb those risks with securities that benefit from inflation.
📈 A higher-than-expected reading should be taken as positive/bullish for the USD, but could have a negative impact on the country’s stock market.
📉 A lower-than-expected reading should be taken as negative/bearish for the USD, but could have a positive impact on the country’s stock market.
U.S. Retail Sales – Friday, October, 14th
The U.S. Retail Sales will be released on Friday, October 14 at 15:30 (GMT+3).
The term retail sales refers to an economic metric that tracks consumer demand for finished goods. This figure is a very important data set as it is a key monthly market-moving event.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
Retail sales are reported each month by the U.S. Census Bureau and indicate the direction of the economy. It acts as a key economic barometer and whether inflationary pressures exist. Retail sales are measured by durable and non-durable goods purchased over a defined period of time.
❗ A higher-than-expected reading should be taken as positive/bullish for the USD, while a lower-than-expected reading should be taken as negative/bearish for the USD.
US Index of Prelim Consumer Sentiment – Friday, October, 14th
The US Index of Prelim Consumer Sentiment will be released on Friday, October 14 at 17:00 GMT+3.
The US Index of Consumer Sentiment (ICS), as provided by University of Michigan, tracks consumer sentiment in the US, based on surveys on random samples of US households.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
The index aids in measuring consumer sentiments in personal finances, business conditions, among other topics. Historically, the index displays pessimism in consumers’ confidence during recessionary periods, and increased consumer confidence in expansionary periods.
❗ The increase in consumer spending in turn helps the economy sustain its expansion. If for some reason consumer confidence declines, consumers become less certain about their financial prospects, and they begin to spend less money; this in turn affects businesses as they begin to experience a decrease in sales.
That’s it for this week! 👋
