Economic Calendar - Things to Watch in upcoming Week
The Federal Reserve, which wraps up its two-day policy meeting on Wednesday, is expected to make some minor adjustments to the language in its rate statement after it adopted a new approach last month to meet its 2% inflation target. The Fed’s decision to tolerate periods of higher inflation effectively means that interest rates will remain lower for longer.
The Fed will also update its projections for the economic and interest rate outlook, known as the dot plot, which will include forecasts for 2023 for the first time.
Stock market volatility may continue
Some investors are worried that last week’s stock market volatility - which knocked the Nasdaq down as much as 10% from its highs and rocked other indexes - is the start of a larger sell-off that will throw the market off its course after a six-month rally.
But other investors view the recent slump as a healthy consolidation after a stunning five-month rally in the S&P 500 that was powered by a small group of heavyweight tech companies and massive amounts of fiscal and monetary stimulus.
The British government is to begin debating the internal market bill on Monday and while Prime Minister Boris Johnson has an 80-seat majority, internal discontent over the bill could test his leadership.
The move to table a bill that would breach the existing withdrawal agreement, which London openly admits would contravene international law, could sink the chances of a post-Brexit trade agreement, and trigger legal action by the European Union.
Sterling has already lost 4% this month and at $1.28, the full risk may still not be priced in.
The Fed shift to tolerate higher inflation, effectively a pledge to keep policy loose, puts other central banks in tough spot. Unless they follow suit, the effects of the weaker dollar against their currencies could threaten their economic recovery and their inflation outlooks.
Last week the European Central Bank said the stronger euro is not yet a concern. But it, along with its peers in the UK and Japan, which meet this week, could eventually be forced down the Fed's looser-for-longer route.
No policy changes are expected from the Bank of Japan or the Bank of England. But the BoE may flag extending its bond-buying to help an economy battered by the effects of the pandemic and Brexit.
Other reports and meetings
As for other important meetings and reports scheduled for this week: the next meeting of the Eurogroup will be held on Monday. An OPEC monthly report will also be published, which will address the key factors affecting the global oil market. The report will also forecast the expected developments on the crude oil market for the next year.
At the same time, a monthly review of the International Energy Agency will be published, which will also review the oil market.
The US Treasury Department will present to Congress a report outlining developments in international economic and monetary policy in the United States' major trading partners.
In addition, a number of important data are expected to be released in China. In particular, the August figures for China industrial production, the August figures for retail sales and the unemployment rate should be made public on Monday.
Updated unemployment (July) data will also be published in the UK.
As for Russia, it will publish July wage growth figures, August unemployment figures, industrial production as well as retail sales figures for the previous month. Changes in interest rates should also be addressed. The Central Bank of Russia will make decision on short-term rates. This decision will mainly depend on the economic growth forecast and the inflation factor.
In the Eurozone, wage figures will be announced in the second quarter of the year. August data on exports-imports and trade balance in Japan will be announced. And finally, the Center for European Economic Research in Germany will publish an index of economic sentiments.