The Fed’s event may be over, but the party won’t stop for dollar bulls and bears! Let’s look at catalysts that could move the Greenback this week.
Flash PMIs (Sept 23, 1:45 pm GMT)
Uncle Sam will kick off this week’s data parade with leading indicators on the manufacturing and services industries.
Markit’s last PMI releases showed us that the U.S. manufacturing industry had contracted in August, as it fell from 50.4 to a 119-month low of 49.9.
The service industry didn’t fare much better with its decline to a three-month low of 50.9 from its 53.0 reading in July. The manufacturing PMI has since been revised higher to 50.3 while the services counterpart was revised lower to 50.7.
This week analysts see the manufacturing index maintain its 50.3 reading in September, while the services PMI is expected to jump from 50.7 to 51.5 for the month.
Final GDP reading (Sept 26, 12:30 pm GMT)
The most closely watched U.S. data release is likely the final Q2 2019 GDP reading, which is expected to confirm that the economy’s growth had “normalized” from a strong 3.1% in Q1 to a steadier growth of 2.0% in Q2.
Aside from the headline numbers, look out for the composition of Uncle Sam’s growth. If you recall, the last reports showed consumer spending boosting growth while business investment and government spending slowed down. A pop in investments, or a dip in consumer spending, could inspire a bit of volatility among major dollar pairs.
FOMC presser and members’ speeches
Voting member John Williams is first today at 1:50 pm GMT in a satellite speech in New York. St. Louis’ James Bullard, who officially voted for a deeper rate cut in September, is next with a speech in Illinois at 5:00 pm GMT.
Chicago’s Charles Evans, who was among those who voted for the 25-basis point cut, is next with a speech in Illinois on Wednesday at 12:00 pm GMT. Kansas’ Esther George – who voted to keep rates steady – will follow at 2:00 pm GMT with a speech in DC.
Richard Clarida, who also voted for a 25bp rate cut, will take center stage on Thursday at 3:45 pm GMT in San Francisco. Last but not the least is Randal Quarles – who also voted for the cut – with a speech in DC on Friday at 12:30 pm GMT.
We know from the breakdown of last week’s decision that Fed members are generally divided on where they think U.S.’ interest rates should be. This week we could see who has strong conviction and who’s more likely to bend his/her votes depending on how specific U.S. data points turn out.
Core PCE price index (Sept 27, 12:30 pm GMT)
If the members’ speeches aren’t enough catalysts for ya, their favorite gauge of inflation should make dollar price action more interesting.
Last month’s personal consumption expenditures (PCE) price index rose by 0.2% in July, faster than the 0.1% uptick that we saw in June. The core figure that excludes volatile items such as food and energy maintained its 0.2% uptick and enabled the annualized figure (the one Fed members REALLY watch) to sustain its sub 2.0% increase of 1.6%.
This week analysts see the monthly core PCE maintaining its 0.2% increase for the month of August. The annualized figure, on the other hand, could inch higher from 1.6% to 1.8% for the month.
Stronger-than-expected PCE numbers would point to consumer spending propping up the economy in the third quarter and ease pressure on the Fed to cut its rates further this year.