The following article is based on research by Marshall Gittler, Head of Investment Research for FXPRIMUS.
FXPRIMUS Indicators and events for week of Sep. 26th: Clinton/Trump debate, OPEC gathering, EU & Japan inflation, US personal income
There are some major indicators out this week, but overall the political events are likely to be more important than the economic ones.
Monday night US time – Tuesday morning GMT – former First Lady, Senator and US Secretary of State Hillary Clinton meets building magnate Donald Trump for the first of three US presidential debates. These two couldn’t be more different. Clinton has been at the center of world politics since she became First Lady in 1993 and knows policy inside and out. Trump appears to have almost no knowledge of current events, yet he has proven himself to be a genius in deflecting questions and ridiculing his opponents. Both sides will be trying to convince the people who are still undecided. The stakes are high: the polls give Clinton only a small advantage over Trump, so one of the debates could sway things either way. If it starts to look like Trump is likely to win, the dollar would probably decline, in my view. The MXN is likely to sink even faster though!
The other major event is the informal OPEC meeting in Algiers. All the oil ministers will be in town for an oil industry conference and will hold an informal meeting afterwards. If an agreement seems within reach, they could turn their informal meeting into an extraordinary meeting and make any decision official. But reports on Friday that Iran refuses to freeze its output makes it unlikely that they can reach any such agreement. Oil prices and the oil currencies, such as CAD, are likely to respond to the news out of Algeria.
The EU data started off today with the Ifo index, which was much better than expected. Then Thursday we get German unemployment and CPI, followed by the EU-wide CPI the next day, as usual. Inflation is expected to accelerate somewhat, which could take some pressure off of the ECB and therefore be EUR-positive.
US indicators coming out this week include consumer confidence on Tuesday, the always-disappointing durable goods orders on Wednesday, final estimate of 2Q GDP on Thursday and personal income & spending on Friday. Both income and spending are expected to post slower growth than in the previous month, which could be negative for the dollar.
The usual end-of-month wave of indicators from Japan includes their wide variety of inflation measures, most of which are headed in the wrong direction. But after last week’s confusing change in Bank of Japan monetary policy, it’s not clear what the authorities are likely to do in response. Nonetheless, a further fall in the CPI may be negative for the yen.
Sunday night GMT – next Monday morning Japan time – the Bank of Japan releases its quarterly Tankan report. It’s expected to show current conditions for large manufacturers staying the same for the third quarter in a row, but they expect a slight improvement in the coming quarter. No big change may be neutral for the yen.
Finally, Caixin/Markit release their China manufacturing PMI on Friday, while the national authorities will release the official PMIs on Saturday. Both manufacturing PMIs are expected to improve marginally, which may help global risk sentiment and put a bid on stock markets (and AUD & NZD) Monday morning.