This trading week was packed with major events, with central bank decisions from the Bank of England, Bank of Canada, Bank of Japan, and the US Federal Reserve taking center stage. Aside from that, the US labor market data played a key role in shaping market sentiment.
China:
● Industrial Production (Year-over-Year) (August). Actual figure: 5.2% / Forecast: 5.7% / Previous: 5.7%. The slower pace of growth in manufacturing suggests a potential cooling in China’s economy.
United States:
● Retail Sales (Month-over-Month). Actual figure: 0.6% / Forecast: 0.6% / Previous: 0.2%. Retail sales exceeded expectations, briefly supporting the dollar. That being said, dollar pairs remained mostly flat, as markets waited for the Fed's decision.
● Core Retail Sales (Month-over-Month). Actual figure: 0.7% / Forecast: 0.4% / Previous: 0.4%. This better-than-expected figure also lent positive momentum to the USD.
Eurozone:
● ECB President Lagarde's Speech. The ECB president stated that the “disinflation process has been completed,” noting that the European economy remains stable, the labor market is resilient, inflation is within expectations, and the growth outlook for 2025 has been revised upward. These comments could provide short-term support to the euro.
● Consumer Price Index (Year-over-Year). Actual figure: 2.0% / Forecast: 2.0% / Previous: 2.1%. Inflation came in slightly below the previous reading but matched forecasts, resulting in a limited market reaction.
Canada:
● BoC Interest Rate Decision. Actual figure: 2.5% / Forecast: 2.5% / Previous: 2.75%. The Bank of Canada lowered its key rate as expected, citing a weaker labor market, subdued inflation, and a 1.6% GDP contraction in H2. These factors put pressure on the CAD in the short term.
United States:
●Crude Oil Inventories (EIA). Actual figure: -9.285M / Forecast: 1.400M / Previous: 3.939M. A much larger-than-expected drawdown in inventories helped support oil prices.
●Fed Interest Rate Decision. The Fed cut interest rates by 25 basis points, as anticipated. Following the announcement, the USD declined against a basket of major currencies.
●FOMC Press Conference. The Fed indicated two more rounds of easing in 2025 and one in 2026, which is a more gradual approach than previously expected. This shift in tone contributed to the market’s dovish interpretation.
United Kingdom:
● BoE Interest Rate Decision. Actual figure: 4.0% / Forecast: 4.0% / Previous: 4.0%. The Bank of England left the rate unchanged, in line with expectations. As a result, the market showed no strong reaction.
United States:
● Philadelphia Fed Manufacturing Index. Actual figure: 23.2 / Forecast: 3.7 / Previous: -0.3. An unexpectedly strong reading supported the USD and helped counter losses following the Fed decision.
● Initial Jobless Claims. Actual figure: 231K / Forecast: 241K / Previous: 264K. This labor market data also exceeded expectations and contributed to renewed dollar strength.
Japan:
● BoJ Interest Rate Decision. Actual figure: 0.5% / Forecast: 0.5% / Previous: 0.5%. The Bank of Japan kept its rate unchanged, as expected. The decision had little impact on the yen.
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