Week ahead: Focus likely on US data - Nomura

FXStreet (Bali) - This week, the focus will likely be largely on US data, notes David Fritz, Global FX Strategist at Nomura.

Key Quotes

"In that regard, there are two data points that will command more attention than the others; namely, retail sales and the JOLTS report."

"Consumer fundamentals have largely been favorable (low energy prices, a high savings rate, and a solid labor market improvement), but recent financial volatility may dampen consumer activity, and retail sales data on Wednesday will indicate the relative health of consumer spending given these developments."

"The JOLTS report will indicate the amount of “churn” in the jobs market, a measure of the health of the labor market. The Beige Book is expected to show slowing economic momentum at the end of the third quarter, and it will be interesting to look for the impact of external factors on business activity."

"The data will be continuously scrutinized in the context of expectations for timing of the Fed’s liftoff, which Nomura currently sees as marginally more likely to be in March 2016 rather than December 2015."

"The recent minutes released did not give a clear indication except to reiterate that the Committee expects that conditions for liftoff will be met before year end. Incoming data will therefore continue to be important in regards to expectations, and with the high uncertainty around expectations for the Fed the reports may create volatility around releases."

"The UK has two important data releases next week as well—the inflation report on Tuesday and the employment report on Wednesday. CPI data has been choppy recently, and there are no expectations for a break to a trend higher quite yet. The employment report is expected to show moderate strength, although the unemployment rate is not forecast to drop from its 5.5% level."

"Overall, the data from the UK has shown the economic cycle to be advanced, which should add to inflationary pressures and rising wages. The UK data will continue to be scrutinized similarly to the US data for any clues to BoE liftoff expectations."

"The BOJ will release the minutes from its September meeting as well next week. Many market participants still expect BOJ easing at the meeting at the end of the month, and the minutes may provide some clues to help judge the likelihood of this happening."

"Commentary and discussion on the inflation and economic conditions might be interesting, although expectations and data continued to fall and disappoint after the September meeting, and as such the views expressed at the time might be a bit stale."
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