Summary:
- UK retail sales will give as a complex picture of the economy as inflation figures and labour report are already behind us, GBP awaits the BoE’s speakers either
- The House of Representatives is to vote on its version of tax plan today, but the key battle will be held in Senat
- Investors may also react to the US industrial output data
The retail sales report will be the last one out of the string of data scheduled to release this week. Figures from the labour market was decent and given the weakness in the US dollar GBPUSD managed to recover losses from the beginning of the week stemming from political turmoil and miss in inflation. Today’s prints may spur some volatility on the pound. Moreover, House of Representatives is set to vote on tax reform bill. However, it’s a formality and the Senat should have the last say. Investors will also focus on the US industrial data and speakers from central banks, including prominent figures from BoE.
9:30 am BST – UK, the retail sales report for October. The published data this week from the UK economy was quite decent. Obviously, it means that BoE will remain inert for a longer period of time but the shape of the labour market could balance to some extent other weaknesses. Today’s print will be important given that consumption is the main driver of the whole economy. Thus, higher numbers could lead to faster growth. Consensus calls for increase from 0.1% m/m to 0.8% m/m.
10:00 am BST – Euro area, final CPI readings for October. Inflation remains a key issue for EBC while it decides on changes in the monetary policy. After a pickup in the first part of the year, we noted a slowdown as it reflected an adverse base effect. The initial print showed a growth of 0.9% y/y in the core measure.
1:30 pm BST – US, initial jobless claims and Philly Fed index. It’s a second tier data but investor sometimes look at them. Nevertheless, they shouldn’t lead to higher market reaction. Intial jobless claims are seen to drop from 239k to 235k, whilst Philly Fed is to decline to 25.0 from 27.9.
2:15 pm BST – US, industrial production. The service sector is the biggest contributor to the US growth but industrial sector is still relevant, thus, it will be the most important print from the US today. Investors look for pickuop of 0.5% m/m from 0.3%, while manufacturing output is projected to rebound to 0.6% m/m from 0.1%.
House Representatives is to vote on the tax reform. It is a formality at this stage as the market focuses on the Senate bill. The Senate is expected to finish marking up their bill this week but last minute changes have led to clashes between Republicans and Democrats over the repeal of the Affordable Care Act’s individual mandate. However, a smooth passage of the bill today may help the US dollar somewhat.
It’s also worth remembering about speeches of central bankers, including the head of BoE, Mark Carney:
- 15:00 – BoE, Carney, Broadbent and Cunlife
- 15:10 – Fed’s Mester
- 18:30 – Fed’s Kaplan
GBPUSD reversed initial losses from the beginning of the week and better retail sales figures may push it higher. Souce: xStation5