### United States
This week’s U.S. economic data is not anticipated to significantly alter expectations for Federal Reserve policy. While the New York and Philadelphia Fed surveys may offer insights, they’re premature to be fully reflective of the national economic landscape. Import and export prices contribute to the inflation outlook. However, they run below domestic prices, with the U.S. being relatively open, as measured by exports plus imports as a percentage of GDP (~27%). Retail sales and industrial output data, scheduled for Thursday, are vital indicators of the economic health, though housing starts and permits are predicted to demonstrate softness, typically having minimal impact on markets. Corporate earnings season is also in focus with 43 S&P 500 companies reporting this week, setting a low benchmark for growth at 4.1%.
### Eurozone
The week begins quietly for Europe, with economic calendars light on the first day. Germany’s October ZEW survey later in the week may offer some optimism, potentially showing a small improvement along with an anticipated 1.8% surge in industrial output, marking the largest increase since April 2023. Attention is set on the European Central Bank (ECB) meeting, expected to deliver its third rate cut of the year. Fitch has downgraded France’s credit outlook to negative, following the unveiling of the 2025 budget, which may bypass the National Assembly vote via constitutional powers. The UK’s labor market report (due tomorrow) and the September CPI (expected Wednesday) are also in focus. The euro is hovering around the $1.0950 mark, with key options set to expire today and later this week. Market participants are cautiously awaiting Thursday’s ECB rate decision.
### United Kingdom
Sterling continues to trade within last Thursday’s range (~$1.3020-$1.3095). While the £1.30 support level remained firm last week, upward movement has been limited, with sellers emerging around $1.3080. The UK’s economy grew by 0.2% in August, implying potential upside risks to the labor market data. However, weaker-than-anticipated services and construction sectors paint a mixed picture. Manufacturing outperformed expectations, but it represents only a small portion of the UK labor market.
### China
China’s recent economic data has sparked discussions, with the finance minister’s fiscal briefing offering less detail than expected, focusing broadly on supporting local government finances and the property market. Inflation data showed CPI at 0.4%, below consensus, while PPI deflation deepened to -2.8%. Food prices surged, driven by a 23% year-over-year rise in vegetable prices. Despite the softer economic indicators, Chinese equities advanced, with the CSI 300 up by 1.9%. September’s trade surplus, registering at $81.7 billion, was smaller than anticipated, with exports and imports also slowing down. Aggregate financing saw an uptick, reaching CNY 25.66 trillion for January-September.
### Japan
Japan is set to finalize its August industrial production estimate, initially reported as a sharp 3.3% decline, notably in the auto and chemical sectors, exacerbated by warnings of potential earthquakes and typhoon activity. Industrial output is expected to have fully recovered through September-October. Amid a firmer dollar, the yen traded slightly below JPY149.50, remaining stable despite the weaker currency and a bullish stock market ahead of the October 27 elections.
### Canada
Canada’s September CPI is due tomorrow, with expectations of a headline rate slipping below 2%. Despite Friday’s unexpectedly strong job growth, the market is mildly anticipating a 50 bps rate cut by the Bank of Canada next week. Meanwhile, the Canadian dollar is under pressure, approaching eight sessions of decline, currently trading near CAD1.3800—its weakest level since early August. The currency is finding little reason for recovery ahead of the CPI release. A move above CAD1.38 seemingly finds minimal chart resistance until reaching closer to CAD1.3850.
### Australia
The Australian dollar ended last week on a high, settling above $0.6750, but it has since lost some ground, finding support in the $0.6720-25 range. Near-term potential exists for a rise towards $0.6775-$0.6800, where options worth A$3 billion expire tomorrow. The currency often acts as a proxy for China’s economic activity, and currently trades heavily amid an uncertain global outlook.
### Mexico
The Mexican peso recorded its lowest settlement for the week just before the weekend at MXN19.28, with further declines today fraying MXN19.25. Unlike the Canadian dollar, the peso has strengthened in eight of the past ten sessions. It stands alongside the South African rand and the Polish zloty as one of the few emerging market currencies to gain against the U.S. dollar. A break below MXN19.11 would pave the way for testing MXN19.00, a level not breached in almost two months. On the other hand, concerns over President Lula’s fiscal policies have kept the Brazilian real on the defensive, last settling above BRL5.60.
