Market Weigh the Odds, CPI To Tip the Scales?

Tuesday, 10 September 2024, 08:00 – German CPI (YoY) (Aug)

The German Consumer Price Index (CPI) preliminary data released on August 29, 2024, showing a year-over-year increase of 1.9%. This figure was below both the forecast of 2.1% and the previous month’s 2.3%. The decline in inflation is largely attributed to weaker economic activity, reduced consumer demand, and falling energy prices, which have dampened overall price growth. Additionally, the stagnation in Germany’s economic growth and concerns over the Eurozone’s broader economic health have further limited inflationary pressures. The upcoming data release is expected to remain subdued and likely to stay below 2%. Given that Germany is the largest economic power in the EU, upcoming data could prompt the ECB to adopt a more dovish stance, particularly if inflation continues to show weakness.

Wednesday, 11 September 2024, 08:00 – UK GDP (MoM) (Jul)

The latest release of the UK Gross Domestic Product (GDP) for June 2024 shows that the monthly GDP was flat (0% growth) following a growth of 0.4% in May 2024. The lack of growth in GDP for can be attributed to a mix of factors, including weaker performance in certain service subsectors and industrial actions affecting the health sector. Given the mixed economic signals, the upcoming release is expected to show modest growth or remain flat, depending on several factors such as service sector and manufacturing performance.

Wednesday, 11 September 2024, 14:30 – US CPI (YoY) (Aug)

The U.S. Consumer Price Index (CPI) YoY for July 2024 is 2.9%, which is slightly below the forecast of 3.0% and the previous month’s value of 3.0%. U.S inflation is slowly easing and Contributing factors include easing supply chain pressures, a slowdown in energy prices, and stabilization in some key components like housing and used cars. Additionally, the Federal Reserve’s tight monetary policy, with higher interest rates, has likely contributed to curbing inflationary pressures by slowing down economic demand Based on recent trends, the upcoming release is expected to display stabilization around the current level of 2.9% or slightly lower inflation rate.

Thursday, 12 September 2024, 14:15 – ECB Interest Rate Decision (Sep)

The European Central Bank (ECB) decided to keep its interest rates unchanged at 4.25% during its meeting on July 18, 2024. The ECB’s decision was driven by several factors, primarily the ongoing domestic price pressures, particularly in services, and the expectation that headline inflation would remain above the target well into the next year. Some measures of underlying inflation had increased due to one-off factors, but most either remained stable or decreased in recent months, influenced by the ECB’s tight monetary policy. However, here is no specific forward guidance on future rate paths, but there is a recognition that risks to economic growth are now tilted to the downside, which could potentially lead to rate cuts in the upcoming meeting. Analyst expect the likelihood of a rate cut in September is around 50%, and a December cut is viewed as more certain if conditions allow.