The US$ ended the week under some pressure after the weaker than expected inflation data on Friday which saw the headline CPI rise 0.5% mm, 2.2% yy in September, up from 0.4% mm, 1.9% yy in August, but below expectation of 0.6% mm, 2.3% yy. The Core CPI rose 0.1% mm, 1.7% yy, against the previous 0.2% mm, 1.7% yy. More importantly, core CPI missed consensus of 0.2% mm, 1.8% yy. The September Retail Sales came in pretty much in line with expectations at +1.6%mm. In other markets, stocks made another all-time high while the metals and WTI were all higher, underpinned by the softer dollar.
In weekend events the headlines were dominated by central bank comments from the Autumn IMF/World Bank round table meetings: Highlights were:
Janet Yellen repeated that soft inflation readings are expected to be temporary and that growth remains strong. With the ongoing strengthening of labor markets she expects inflation to move higher next year.
The BOJ’s Kuroda warned over complacency of geopolitical risks. He also said that the BOJ will pursue aggressive monetary easing because the 2% inflation target is still a long way away.
The ECB’s Draghi & Constancio seemed confident that the ECB will reach their inflation goal.
For the coming week, continuing the trend set on Friday with the release of the US/German CPI, the inflation figures for September will be released this week by China (Mon), NZ (Tue), UK and the EU (Wed). Other points of note this week will be the RBA Minutes (Tue), ZEW (Wed) and the Australian Unemployment and China Retail Sales, Industrial Production, Urban Investment, GDP and NBS Press Conference (Thur). The data from the US is generally of a secondary nature; Building Permits/Housing Starts (Wed), Jobless Claims/Philadelphia Fed Mfg Survey (Thur), Existing Home Sales (Fri). Otherwise politics will be heavy on the agenda and there will be an extraordinary EU Economic Meeting on Wed/Thur. Also of note; The 5 yearly China leadership battles also takes place this week.
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