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Week Ahead in FX (Oct. 9 – 13): FOMC Meeting Minutes and U.S. And China’s Inflation Data

October 9, 2023| Forex Market

China is back to printing economic data! Aside from some top-tier Chinese releases, the Fed will also be under the spotlight with its meeting minutes.

On top of that, we’ll traders may take their cues from the U.S. CPI and consumer inflation expectations report for clues on the Fed’s moves for the rest of the year.

Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!

And now for the closely-watched economic indicators on the calendar this week:

FOMC meeting minutes

At their September meeting, the Fed kept its interest rates steady as expected.

However, the members’ “dot plot” projections also hinted at another interest rate hike this year as well as a longer period of high-interest rates.

Let’s see if this week’s meeting minutes release will give hints on what data points or goalposts may change the members’ biases in the foreseeable future. Keep your eyes peeled on October 11 at 6:00 pm GMT!

U.S. inflation-related reports

If you weren’t around last Friday, you should know that USD buyers side-eyed the U.S. labor market data. They took a second look at the high unemployment and the average earnings that were just mid and priced in a possible “soft landing” for the U.S. economy.

This week’s inflation-related reports may bring back fears over a high-interest rate environment. The headline PPI (October 11, 12:30 pm GMT) is expected to maintain its 0.2% uptick while core PPI may slow down from 0.7% to 0.3%.

The opposite is true for the headline CPI (October 12, 12:30 pm GMT), which is seen slowing down from 0.6% to 0.3% while core CPI may maintain its 0.3% uptick.

And then there’s the preliminary University of Michigan consumer inflation expectations report (October 13, 2:00 pm GMT) that the Fed also watches. Analysts see the index slowing down from 68.1 to 68.0 but USD may jump if we see an upside surprise.

China’s inflation reports

On Friday (October 12, 1:30 am GMT) the world’s second-largest economy is printing its September inflation numbers. Headline CPI could speed up from 0.1% to 0.2%. Meanwhile, headline PPI could improve from -3.0% to -2.4% for the month.

Faster-than-expected producer price decreases in China may hint at lower demand and probably spook traders from buying “risky” bets in the markets.

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