DATA DELUGE CONTINUES THURSDAY WITH EUROZONE CPI, US PERSONAL INCOME
After an active Wednesday session, investors can expect another barrage of economic data on Thursday, with reports from the United States and Europe set to draw the most headlines.
The headlines begin at 06:00 GMT with a report on German retail sales. Retail receipts are forecast to decline 0.4% in July, but rise 3.5% annually.
Two hours later, the German government will report unemployment figures for the month of August. The jobless rate is expected to hold steady at 5.7%.
At 09:00 GMT, the European Commission’s statistical agency will release preliminary inflation data for the month of August. The consumer price index (CPI) strengthened to 1.4% in the 12 months through August, according to a median estimate. So-called core inflation is forecast to edge lower to 1.2% from 1.3%.
Eurozone unemployment data will be released at the same time as the CPI report. The region’s jobless rate likely held steady at 9.1% in July.
US data will take over from 12:30 GMT with a government report on personal income and outlays. The monthly report also features the core personal consumption expenditure (PCE) index, which is the Federal Reserve’s preferred measure of inflation. The July core PCE index is forecast to fall to 1.4% from 1.5% in June.
North of the border, Statistics Canada is expected to announce another quarter of robust economic growth. Second-quarter GDP is forecast at 3.7% annually, matching the previous quarter’s gain that made Canada the fastest-growing G7 nation.
Earlier in the day, the Chinese government reported a sharp slowdown in its services sector. The official non-manufacturing PMI slipped to 53.4 in August from 54.5 the previous month. That was the lowest since May 2016.
The euro was one of the heaviest casualties on Wednesday, with the EUR/USD plunging nearly 200 pips. After hitting a new multiyear high of 1.2064, the pair crashed toward 1.1870. With recent data favouring the US dollar, the EUR/USD is vulnerable to sharper correction, perhaps toward the 21 August high of 1.1830.
Like the euro, the Canadian dollar suffered heavy losses in mid-week trade, as the USD/CAD spiked back toward the 1.26 region. That represents a gain of nearly 200 pips from the pair’s lowest point on Tuesday. A solid GDP report on Thursday could help the loonie reverse some of those losses.
Gold prices lost some of their shine on Wednesday after upbeat US data triggered a large rally for the dollar. Bullion continued lower on Thursday, with the spot price briefly crossing below $1,300.00. The outlook on gold largely depends on the interplay between the US economy and the dollar. That means economic data are of utmost importance.