The escalating trade war between the United States and China has eased after the markets have been accommodated by the additional tariffs imposed on each side. But some concerns remain about the NAFTA as the deadline set by the United States approaches the end of September, and there will be informal meetings between the U.S. and Canada on the sidelines of the UN General Assembly.
Also, there is still a state of uncertainty dominating Brexit talks after EU leaders rejected Prime Minister Theresa May's proposals last week to make headlines about possible early elections in November.
The following are the highlights of economic events this week:
US Interest Rate Decision
It is widely expected that the Federal Reserve will raise interest rates next Wednesday to 2.25%, given the recent positive economic data and attention will be directed towards the FOMC economic projections of whether there will be a fourth interest rate hike this year. The press conference of U.S. Federal Reserve Chairman Jerome Powell carefully monitored the tone of the Fed for what is coming.
Also, this week U.S. economic growth data will be released and GDP is expected to grow by 4.2% in Q2 of 2018. The Federal Reserve's preferred indicator of inflation will also be released, as core PCE is expected to rise by 2% in August.
New Zealand interest rate decision
The Federal Reserve will be followed by the Reserve Bank of New Zealand's interest rate decision and no change is expected despite the recent dovish tone, opening the door to interest rate cuts. Interest rates are expected to remain at 1.75%, as recent growth data has exceeded expectations with GDP rising at its fastest pace in two years.
Growth data in the UK
The UK economy grew by 0.2% in the first quarter of 2018 on a quarterly basis and by 1.2% on yearly basis, and the second estimate is expected to grow by 0.4% on a quarterly basis and by 1.3% on yearly basis.
Inflation data in the euro area
Inflation is expected to rise by 2.1% in September after rising by 2% in August. Mario Draghi was not worried about inflation during the recent press conference.
