FX Week Ahead – Top 5 Events: UK Jobs Report; US Inflation Rate; UK Inflation Rate; Australia Jobs Report; US Retail Sales

FX Week Ahead Overview:

• The middle of September has inflation data and labor markets in focus, particularly for the British Pound.
• The Federal Reserve is in its communications blackout period, increasing the potency of the August US inflation report and August US retail sales.
• The August Australia jobs report may help the Australian Dollar continue its rebound after last week’s RBA rate decision.

For the full week ahead, please visit the DailyFX Economic Calendar.

09/13 TUESDAY | 06:00 GMT | GBP Employment Change (JUN) & Unemployment Rate (JUL)

The UK economy continues to inch closer towards stagflation amid slowing growth and multi-decade highs in price pressures. The UK labor market is likewise losing momentum. According to a Bloomberg News survey, the UK economy gained+128K jobs in the three months through June, down from +160K jobs through May, while the unemployment rate held steady at 3.8% in July. Ahead of a delayed Bank of England rate decision due to Queen Elizabeth’s death, the data are unlikely to help instill confidence in the British Pound.

09/13 TUESDAY | 12:30 GMT | USD Inflation Rate (CPI) (AUG)

The upcoming August US inflation report (CPI) should offer additional evidence that peak inflation is in the rearview mirror. According to a Bloomberg News survey, headline US inflation figures are due in at -0.1% m/m from 0% m/m and +8.1% y/y from +8.5% y/y, while core readings are expected unchanged at +0.3% m/m and +6.1% y/y from +5.9% y/y. Softer readings could translate into diminished Fed rate hike odds, which while good news for US stocks and gold prices, would be bad news for the US Dollar.

09/14 WEDNESDAY | 06:00 GMT | GBP Inflation Rate (CPI) (AUG)

Once again, UK inflation rates are expected to hit a fresh 40-year high when the August UK inflation report (CPI) is released this Wednesday. The headline reading is due in at +10.2% y/y from +10.1% y/y, while the core reading is due in at +6.3% y/y from +6.2% y/y. Additional acceleration is anticipated over the coming months as winter approaches against the backdrop of record higher energy prices. Balancing stagflation concerns, the elevated UK price pressures may not do much to change the calculus for the Bank of England ahead of their September rate decision next week.

09/15 THURSDAY | 01:30 GMT | AUD Employment Change & Unemployment Rate (AUG)

The Australian Dollar has been rebounding in recent days after the initial sell-off following the September Reserve Bank of Australia rate decision. While the Aussie’s rebound may have more to do with the weakening US Dollar, incoming labor market figures may help the rally amid signs of a still-strong domestic economy. The August Australia jobs report is expected to show further progress for the labor market, with forecasters anticipating jobs gains of +35K from -40.9K in July, which should keep the unemployment rate on hold near the multi-decade low of 3.4%.

09/15 THURSDAY | 12:30 GMT | USD Retail Sales (AUG)

US consumer confidence is rebounding as gas prices fall and US inflation rates ease, a potentially good sign for consumption trends. Concerningly, however, US consumers seem to be weathering the storm in the short-term bypiling on debt in order to sustain their spending habits. According to a Bloomberg News survey, US retail sales were unchanged at 0% m/m in August, but the retail sales ex-autos figure is due in at +0.1% m/m from +0.4% m/m. The Atlanta Fed GDPNow growth tracker for 3Q’22 currently sits at +1.4% annualized. In totality, the data shouldn’t prove harmful to the US Dollar.

— Written by Christopher Vecchio, CFA, Senior Strategist