Important week ahead for Global interest rates

Both China and Japan are expecting interest rate decisions this week, along with important inflation data from the UK.

UK

Tuesday brings the first significant data releases of the week with the ILO Unemployment Rate, which currently sits at 4.2%. As you may expect, the Unemployment Rate is the broadest figure for the UK labour market and therefore is a leading indicator of how well the economy is performing. The figure has been on a steady decline since February this year and is expected to remain at a similar level, which considering the Omicron wave, could be quite positive.

On Wednesday, crucial CPI (YoY) data will be released, which could further affect the Bank of England’s decision on monetary policy next month. The already high figure of 5.1% is only expected to increase to 5.4%, as rising prices remain at the forefront of most traders and politicians’ minds alike.

Friday will bring data on Retail Sales (MoM), which is expected to fall back to 0.6% from 1.4% for the first decline since August. However, it must be said it seems very difficult to predict this figure as many expectations have been off the mark in the previous year. Consumer spending can not only be a good indicator of how the economy is performing but can also be heavily linked with inflation.

US

The US is having a slightly quieter week when it comes to economic data releases compared to the last few weeks. On Thursday, both the Philadelphia Fed Manufacturing Survey and Initial Jobless Claims are being released. The Philadelphia Survey is an important indicator of economic health as businesses react quickly to market conditions, so sentiment changes can be an early signal of future economic activity. It is expected to jump from 15.4 to 18.5, which will likely be very positive for markets. Initial Jobless Claims data is also going to be released, which has only recently taken a jump up to 230K, but if it follows the trend over the past couple of months it will likely drop once again, filling investors with confidence.

Rest of the World

As previously mentioned, both China and Japan are announcing their Interest Rate decision in the upcoming week. Both are expected to keep their rates the same, although they are at very different ends of the spectrum as China’s is quite high at 3.8%, whereas Japan’s is currently negative at -0.1%.