FX Markets Turn To Inflation Data From New Zealand, The UK, And Canada

10/16 Monday | 21:45 GMT | NZD Consumer Prices Index (Q3’17)

New Zealand is expected to see a small rise in Q3’17 inflation figures, constrained by the reduced base effect from oil prices as well as a stronger trade-weighted New Zealand Dollar year-over-year. As a result, we’re looking for the Q3’17 New Zealand CPI figure to come in at +1.8% (y/y), which would be the second consecutive quarter with sub-2% inflation. Another reading below the RBNZ’s medium-term target could weigh on the New Zealand Dollar as rate hike speculation for the remainder of 2017 and the first half of 2018 stays tempered.

Pairs to Watch: AUD/NZD, NZD/JPY, NZD/USD

10/17 Tuesday | 08:30 GMT | GBP Consumer Price Index (SEP)

The British Pound’s post-Brexit base effect weakness has almost worked its way out of the system, but its influence will linger at the upcoming inflation release. Consensus forecasts are calling to see price pressures increase by +0.3% m/m (down from +0.6% in August) and +3.0% y/y (up from +2.9% in August). Likewise, Core CPI is expected to hold at +2.7% (y/y).

The Tuesday data release bears significant importance for the Sterling, as several Bank of England policymakers have expressed concerns of an “inflation overshoot,” warning that headline CPI could overtake 3% by October. Now that inflation is expected to reach these lofty levels, the BOE appears to be locked-in for a November rate hike. Coming into this week, there was a 75% chance of a 25-bps tightening move next month when the BOE releases its Quarterly Inflation report.

Pairs to Watch: EUR/GBP, GBP/JPY, GBP/USD

10/19 Thursday | 00:30 GMT | AUD Employment Change & Unemployment Rate (SEP)

According to Bloomberg News consensus forecasts, the Australian employment increased by +15.0K in September after gaining+54.2K in August. The report for August was solid, with full time employment increasing by +40.1K over the period; the composition of jobs shifted from to more full time and fewer part time. Additionally, the unemployment rate is expected to hold at 5.6%. Despite the steadily improved state of the labor market, uneven economic data appears to be a wrinkle in the outlook for the Reserve Bank of Australia, which noted recently that wage pressures aren’t strong enough to provoke a rate hike any time soon. Interest rate expectations (per overnight index swaps) show only a 2.4% chance of a hike by December 2017.