Key events to watch in the week ahead: 13 – 19 November 2023

This week’s overview

Following the conclusion of the Federal Open Market Committee (FOMC) meeting, this week’s economic calendar has turned in relatively quieter, which translated to a drift in major US indices. Focus was on a series of Fedspeak, which brought some pushback against dovish market expectations and pave the way for the US dollar to recover close to half of its post-FOMC losses.

On another front, Brent crude prices crashed through its key 200-day moving average (MA) this week, as markets price out the risks of a wider Middle East conflict, alongside shrinking supply-demand imbalance. Similarly, gold prices also saw some unwinding of previous safe-haven flows, on track to deliver its second straight week in the red.

Heading into the new week, here are four things to note.

14 November 2023 (Tuesday, 9.30pm SGT): US consumer price index (CPI)

With the rates market pricing that the Federal Reserve (Fed)’s hiking cycle has come to an end, the inflation data will be on watch to justify that additional tightening are not needed. More importantly, it will also determine if the Fed has room to cut rates if economic conditions worsen. Currently, market expectations are for the Fed to cut rates in June 2024.

In September, core inflation has declined for the sixth straight month to come in at 4.1%. On the other hand, headline inflation has bounced off its July low, resurging to 3.7% on higher energy prices. Ahead, expectations are for the headline rate to decline to 3.3% from a year ago, while core inflation is expected to hold steady at 4.1% year-on-year.

15 November 2023 (Wednesday, 7.50am SGT): Japan’s 3Q preliminary GDP

Japan’s 3Q gross domestic product (GDP) is expected to contract by an annualised 0.6%, reversing from the previous 4.8% expansion in 2Q. This will mark the first contraction since 3Q 2022, with the weaker showing likely to complicate the Bank of Japan’s (BoJ) policy normalisation process. Quarter-on-quarter, the economy is expected to shrink by 0.1% versus the previous 1.2% growth.

The robust 2Q GDP was heavily attributed to a 1.8% contribution from net trade, but trade activities have softened since then on weaker external demand, while recovery in private consumption remains modest. The shrinking of Japan’s economy in the 3Q may highlight prevailing growth risks and reinforce views for the BoJ to adopt a more gradual pace of policy tweaks in exiting its ultra-accommodative stance.

15 November 2023 (Wednesday, 10am SGT): China’s industrial production, retail sales, fixed asset investment

Over the past week, downside surprises in China’s October Purchasing Manager's Index (PMI) and inflation data continue to point to a fragile economic recovery in the world’s second largest economy. The weak data has raised doubts on the success of easing policies efforts thus far, and raised calls for more stimulus from authorities to shore up growth.

Ahead, expectations are for China’s October retail sales to display stronger recovery momentum to 7% year-on-year, up from 5.5% in September. However, industrial production and fixed asset investment are expected to remain unchanged at 4.5% and 3.1% respectively from the previous month.

16 November 2023 (Thursday, 8.30am SGT): Australia’s employment data

In September, the Australian economy added 6.7k jobs, below the expected 20k, while the unemployment rate edged down to 3.6% from 3.7%, following a decrease in the participation rate to 66.7% from 67%.

Kate Lamb, the Australian Bureau of Statistics (ABS) Head of Labour Statistics, stated, "With a slight increase in employment, by around 7,000 people, and the number of unemployed people falling by around 20,000, the unemployment rate fell to 3.6% in September. It is important to note that a decrease in unemployment does not always signify a substantial increase in employment. The decline in the unemployment rate in September primarily reflected a higher proportion of people moving from being unemployed to not in the labour force."

For October, the market anticipates a rise of 20k in employment and an increase in the unemployment rate to 3.7%. The participation rate is expected to remain stable at 66.7%.