Economic Calendar – Things to Watch This Week
U.S. Housing Data
The Commerce Department is to publish a report on building permits and housing starts for August on Wednesday.
The data is expected to show that permits dipped 0.1% slightly to 1.310 million last month, while housing starts are forecast to show a gain of 5.8% to 1.240 million.
UK Inflation Figures
The UK Office for National Statistics will release data on consumer price inflation for August on Wednesday.
Analysts expect annual CPI to inch down to 2.4%, a tad slower than the 2.5% increase seen in July, while core inflation is forecast to dip from 1.9% to 1.8%.
In addition to the inflation report, traders will focus on monthly retail sales data due on Thursday for further hints on the health of the economy.
Brexit talks are set to intensify over the coming week, with the first of three summits that European Union leaders hope will settle an agreement for departing Britain within the next two months.
EU officials will get an update on negotiations in Austria on Thursday and also decide whether to hold a special summit on Brexit in November, now that they no longer expect to clinch a deal at their regular gathering scheduled for Oct. 18-19.
Bank of Japan Policy Meeting
The Bank of Japan (BOJ) is widely expected to keep its short-term interest rate target at minus 0.1% and the 10-year government bond yield target at around zero percent at the conclusion of its two-day meeting on Wednesday.
The central bank is expected to debate whether escalating global trade tensions could undermine its confidence that the export-reliant economy will sustain a moderate expansion.
Turkish lira eases against dollar, attention turns to medium-term plan
By Daren Butler, Nick Macfie
Turkey’s lira weakened against the dollar on Monday as investors weighed up the impact of last week’s massive rate hike and turned their attention to this week’s announcement of the government’s medium-term economic plan.
Finance Minister Berat Albayrak will announce Turkey’s medium-term economic progamme on Thursday. He has promised cost-cutting measures and more efficient spending as the economy enters an expected sharp slowdown.
Gold Price Hinges on US-China Trade War Developments
By Peter Hanks
Fundamental Forecast for Gold: Bearish
Gold vulnerable to trade wars as the dollar climbs in value.
Once reports came out that President Trump asked his aids to push forward with the $200 billion in tariffs on China, the precious metal proceeded lower mid-day in the Friday session.
Further, the re-emergence of trade wars will likely exert some pressure on emerging markets other than China. Emerging currencies were just beginning to stabilize and that was reflected in a weakening Dollar. Now that the $200 billion in tariffs seems probable, expect emerging market weakness to re-emerge somewhat.
Even if downward pressures were to wane, events to propel gold higher are limited. First off, the economic calendar for the week is very quiet so action due to data releases will be minimal.
A NAFTA breakthrough could generate a move higher as well as a breakthrough in the US-China trade war discussions. Unfortunately, these are fairly unlikely. Any breakthrough in the US-China talks to delay or escape the tariffs would simply see the move on Friday reversed. Barring a truly landmark agreement, trade wars will continue to harm gold.
GBP: Sterling Continues to Benefit From a Lack of Bad News
By Nick Cawley
Fundamental Forecast for GBP: Bullish
We remain bullish on Sterling this week after the latest jobs, wages and GDP data all came in better-than-expected this week, while a lack of any negative Brexit news leaves the British Pound looking under-valued. The main data point this is the latest Consumer Price Inflation release on Wednesday with the latest market expectations a nudge lower in annual CPI to 2.4%. This remains above the central bank’s target of around 2% and the latest uptick in wages will be closely watched by the BOE for any additional inflationary feed through into prices. The central bank left all policy measures unchanged at this week’s MPC meeting.
Brexit negotiations remain ongoing with the atmosphere around the talks more amenable with both sides mentioning concessions on previous red-lines, sending a slightly more positive signal to the financial markets. With talks ongoing and nearing deadlines, much work is still needed, especially over the Irish Border, and headlines will continue to drive Sterling.
Drop in silver prices to 32-month lows prompts sellout of Silver Eagle coins at U.S. Mint
By Myra P. Saefong
Analysts attribute the weakness in silver prices to several factors.
“A continued strong dollar trend, record-high equity markets, and a rising-rate environment here in the U.S. have combined to keep precious-metals prices in check this year,” says Gaffney. “Aggressive short selling in paper markets [such as futures], due to a higher dollar, added to the drop in prices.”
Global trade tensions probably will have a big influence on silver, as the “general viewpoint is that the proposal of increased tariffs against Chinese imports will be worse for China than the U.S.,” he says. This should aid “the dollar and will put additional pressure on the metal.”
In any case, at about $14 an ounce, silver was bound to attract more buyers. It’s “now very undervalued, relative to stocks, bonds, and, indeed, gold,” maintains Mark O’Byrne, research director at precious metals brokerage GoldCore in Dublin, which has seen the amount of the metal clients have stored grow 24% this year.
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