The week ahead (25 – 29 September)

25 Sep 2017 02:55 PM

The weekend saw flaming events as elections were held in New Zealand and Germany, New Zealand's ruling National Party has won the largest number of votes, reaching 46%, while the opposition Labor Party has won 35.8%. The next few days will witness talks in order to form a coalition, to form the new government pending the announcement of the results officially on October 7.

Merkel's coalition won about 33% of the votes, after winning 41.5% during the last elections in 2013 and in the second place came the SDP with 20.5%. The shock was the wining of the right-wing nationalist party, the Alternative for Germany (AFD)for the first time and won the third place with 12.6% of the vote.

During the week, attention is directed to a small number of important economic data and a number of speeches from some central bank governors.

Yellen speech and growth data in the United States

Federal Reserve Governor Janet Yellen is due to deliver a speech titled "Inflation, Uncertainty and Monetary Policy" and of course the markets will be watching closely on Yellen's commenting on the Fed's recent decision to keep interest rates unchanged as well as the decision to start cutting the federal balance sheet.

Also, final GDP data for the second quarter of 2017 are scheduled to be released and the preliminary reading has recorded US growth of 3% and the reading is expected to be adjusted to 3.1%. Core personal spending data, the Fed's preferred indicator of inflation, is also expected to remain unchanged at 1.4% in August.

Draghi's testimony before the European Parliament

Mario Draghi, the European Central Bank's governor, is due to give his testimony on the economy and monetary policy to the European Parliament's Economic and Monetary Affairs Committee. The markets are expected to draw any hints about the future of monetary policy in the eurozone.

Also, preliminary CPI data for September will be released and is expected to rise by 1.6% following a 1.5% rise the previous month.

Carney talk and growth data in the UK

Mark Carney, governor of the Bank of England, is scheduled to speak twice during the week of the Bank of England conference to celebrate 20 years of independence. he isn't expected to speak clearly about monetary policy, if he does, he may give some hints about the timing of next interest rate hikes.

Also, final GDP data are scheduled for the second quarter of 2017 and are expected to confirm the initial reading that indicated the growth of the British economy by 0.3%. The year 2016 was good for the British economy, but it slowed down in 2017 due to the uncertainty surrounding the Brexit.

Kuroda speech

Haruhiko Kuroda, governor of Bank of Japan spoke this morning, declining to comment on current JPY levels and expressed the Bank of Japan's willingness to take necessary action when necessary and is scheduled to speak again next Thursday in Tokyo.

Poloz speech and Canadian growth data

Stephen Poloz, governor of the Bank of Canada, is scheduled to speak on Wednesday about recent developments in the Canadian economy and its impact on monetary policy.

Also, GDP data for July will be released. The economy grew by 0.3% in June and grew by 4.5% in the second quarter of 2017 on an annualized basis, prompting the Bank of Canada to raise interest rates recently to 1%.

New Zealand interest rate decision

The Reserve Bank of New Zealand is expected to keep rates at 1.75% again, and we may see the central bank confirm the negativity of the New Zealand dollar.

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