This week brings monetary policy decisions from the FOMC, BOE and BOJ alongside the release of US retail sales and Japan and UK CPI data. The FOMC is expected to hold rates steady, while the outlook could hinge on inflation data. With expectations for a BOJ rate hike strengthening, US retail sales and price data from Japan and the UK will also be in focus.
A series of monetary policy decisions and key economic data releases from Japan, the US and the UK are due this week. As widely expected by the market, the FOMC is expected to hold the policy rate steady, although the latest PPI and CPI data could influence the decision at the September meeting. If inflation strengthens again, short-term market reactions could be significant, potentially shifting expectations over the prospect of a rate hike.
The Bank of England is expected to leave its policy rate unchanged at 3.75% at its monetary policy meeting, with markets continuing to price in an additional rate hike this year. Markets will assess the pound's direction on the assumption that rates will be held steady.
At its monetary policy meeting, the Bank of Japan is almost certain to raise the policy rate by 25bps to 1.25%. If Governor Ueda signals at his press conference that the pace of rate hikes could accelerate, this could affect the yen exchange rate.
In the US, testimony and releases related to various Treasury data, as well as data from the New York Fed's manufacturing survey, are scheduled from the 15th. On the 16th, retail sales, business inventories and foreign purchases of US securities will be in focus alongside the FOMC. In Europe, the ZEW survey and the ECB's CPI projections are among the releases due. In Japan, industrial production, core machinery orders, the trade balance, CPI and developments in the BOJ's interest-rate policy are expected.