Fear of a Global Market Collapse Eases, Global Recession Immanent?

Last Week
Global markets stabilised a little last week as fears of a worldwide market meltdown were eased. Words of support from world leaders began to transform into solid action plans and in some cases actual cash injections.

However, worries over global recession were remembered after a host of poor economic data, especially from the US. Traders were especially worried about US Core Retail Sales, Retail Sales, Building Permits and Housing Starts. All four economic indicators missed expectations and this was reflected by the Michigan Consumer Sentiment number which fell from 70.3 to a lowly 57.5.

This Week
The economic calendar is slightly lighter than normal this week which may keep both stock and forex markets in consolidation. Key events will be the RBNZ and BOC Interest Rate Statements, Bernanke testimony and the BOE Meeting Minutes.

The first high volatility event of the week come from Australia at 01:30 Monday morning. The Australian PPI is expected to come in at 0.9%, compared to 1.0% in the previous quarter.

Later the same day we will see probably the most highly anticipated US event of the week with Bernanke’s testimony before the House of Representatives Budget Committee at 15:00.

At 22:45 we will see QoQ CPI data from New Zealand. Inflationary pressures are expected to moderate slightly from 1.6% previously to 1.5%.

Tuesday will begin with more high volatility from Australia. The October 7th Interest Rate Meeting Minutes are expected. Traders will be very interested in the discussions that took place at a meeting where the RBA surprisingly by cutting a full 100 basis points to 6.00%.

At 03:10 RBA Governor Glenn Stevens is expected to bring more high volatility to the markets when he speaks about the international economy in Sydney.

The BOC Interest Rate Statement is due at 14:00 with a 0.50% cut expected. This will bring the Overnight Rate to 2.00% from 2.50%. This will mean that the BOC has cut the rate by a full one-percentage point in the last 14 days.

We will see some late volatility from the UK as BOE Governor Mervyn King speaks in Leeds. He is due to speak at 20:10 UK time.

The flurry of Australian data continues on Wednesday with the Australian CPI. Economists are expecting an AUD negative release with 1.0% consumer inflation compared to 1.5% in the previous quarter.

At 09:30 we will hear from the BOE Monetary Policy Committee with the BOE Meeting Minutes (visual analysis) release. It is expected that the MPC voted unanimously to cut rates by 0.50% on October 8th as part of the coordinated global move.

The USD/ CAD will be in focus at 13:30 with Canada’s Core Retail Sales expected to crate high volatility. Core sales are expected to moderate slightly down to 0.3% growth in September from 0.4% in August.

Wednesday is rounded off by the second central bank rate announcement of the week. The RBNZ Interest Rate Statement is due at 21:00 with the Official Cash Rate likely to be cut by 1.00% from 7.50% to 6.50%. This mirrors the actions of the RBA earlier in the month who also cut by 1.00%.

The first high volatility event of Thursday will be from the UK. Retail Sales is due at 09:30. This data has been highly volatile of late and this trend looks set to continue. Retail Sales for September are expected to have fallen by 0.8% in September when compared to a 1.2% increase in August.

The Bank of Canada will take the spotlight for the second time in a week on Thursday. The BOC Monetary Policy Report is due at 15:30 and BOC Governor Carney will hold a press conference on the same topic at 16:15.

On Friday morning we are due to see preliminary GDP data from the UK. Gross domestic product is expected to show negative growth of 0.2% after the previous quarter’s number of 0.0%.

Canada’s Core CPI (visual analysis) is due at 12:00 with growth in September expected to mirror that of August at 0.3%. Traders pay most attention the Core number and so does the BOC.

To round off the week we have Existing Home Sales (visual analysis) from the US. This release will also be supported by our visual analysis and historical data tool. The sale of existing residential homes is expected to have increased slightly in September with 4.95M units sold compared to 4.91M in August.