Investors are increasingly overcoming fears of a possible recession in the US, as can be seen by the gains in the main S&P 500 index, which has reached new historic peaks. More important than predicting the future of the economy, however, is understanding the current situation. The rise in US unemployment from 3.4 to 4.2 per cent, although it is still below average, seems to be a worrying sign. The GDP growth rate is 3 per cent in the second quarter, compared to 1.6 per cent at the beginning of the year. Industrial production in August was unchanged from a year ago, indicating that growth is mainly driven by the services sector. Data from the latest PMI reading for manufacturing was 47 (where the cut-off value is 50), suggesting a decline in the near future, while the services sector is expected to grow, reaching a PMI reading of 55. Conotoxia’s analysts therefore remain optimistic about the future of the US economy, closely monitoring labour market and industrial data. In the coming week, US labour market data, which will be announced on Friday, will be particularly important. We also expect news on the UK economy, which is showing the first signs of a return to growth. We will also learn inflation readings for September from Germany and the euro area.
Table of contents:
- UK gross domestic product (GDP) by quarter (Q2).
- German consumer price index (CPI) monthly (September)
- Eurozone consumer price index (CPI) monthly (September)
- US unemployment rate on a monthly basis (September)
Monday, 30.09, 8:00 CET, UK gross domestic product (GDP) by quarter (Q2).
We learned from the preliminary reading that the UK economy grew by 0.9 per cent year-on-year in Q2 2024, the strongest growth since Q3 2022. The main driver of growth was the services sector, which expanded at a rate of 1.3 per cent, but industrial production fell by 0.6 per cent. Investment, household and government spending increased, while exports declined and imports rose. This situation exacerbates the trade deficit and could weaken sterling.
Analysts' consensus is for GDP growth to be confirmed at 0.9 per cent year-on-year.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for GBP, while a lower-than-expected reading could act bearishly on GBP.
Impact: EUR/GBP, GBP/USD, GBP/PLN
Monday, 30.09, 14:00 CET, German consumer price index (CPI) monthly (September)
Annual inflation in Germany stood at 1.9 per cent in August 2024, down from 2.3 per cent in July. This was the lowest inflation since March 2021, helped by a faster decline in energy prices. Food prices rose for the fifth consecutive month.
Analysts' consensus forecasts that Germany's CPI disinflation will continue to advance to 1.5 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the EUR, while a lower-than-expected reading could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Tuesday, 1.10, 11:00 CET, Eurozone consumer price index (CPI) monthly (September)
Annual inflation in the euro area fell to 2.2 per cent in August 2024, the lowest level since July 2021. Growth was driven by the prices of services and food, alcohol and tobacco, while energy prices fell. Disinflation was recorded in the zone's largest economies, with increases in only a few countries such as Latvia and Malta. In its forecasts, the ECB projects average inflation of 2.5 per cent in 2024 and 1.9 per cent in 2026.
The analysts' consensus is for CPI inflation in the euro area to fall to 1.5 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the EUR, while a lower-than-expected reading could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Friday, 4.10, 14:30 CET, US unemployment rate on a monthly basis (September)
The US unemployment rate fell to 4.2 per cent in August 2024 from 4.3 per cent in July. The number of unemployed remained at 7.1 million. The long-term unemployed account for 21.3 per cent of the total unemployed, slightly higher than a year ago. The labour force participation rate remained at 62.7 per cent, the highest since 2020.
Analysts' consensus is for the US unemployment rate to rise to 4.3 per cent.
Impact: Tradingeconomics.com
A higher-than-expected reading could be bearish for the USD, while a lower-than-expected reading could act bullishly on the USD.
Impact: EUR/USD, USD/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
The above trade publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No. 596/2014 of April 16, 2014. It has been prepared for informational purposes and should not form the basis for investment decisions. Neither the author of the publication nor Conotoxia Ltd. shall be liable for investment decisions made on the basis of the information contained herein. Copying or reproducing this publication without written permission from Conotoxia Ltd. is prohibited. Past performance is not a reliable indicator of future results.
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