Today we have quite a few top-tier economic releases. In the European session we just have the German ZEW which is expected at 17.1 vs. 19.2 prior. The most important releases will be in the American session when we will get the Canadian CPI, the US Retail Sales and the US Industrial Production.
The US data is unlikely to change the market's pricing much as in the worst case scenario (strong US data), we could just see a move back to 50/50 chance between 25 and 50 bps cut. I continue to expect a 50 bps "insurance cut" to start the easing cycle and then 25 bps in November and December (barring a quick deterioration in the economy).
12:30 GMT/08:30 ET - Canada August CPI
The Canadian CPI Y/Y is expected at 2.1% vs. 2.5% prior, while the M/M measure is seen at 0.0% vs. 0.4% prior. As always, focus will be on the underlying inflation measures. The Trimmed Mean CPI Y/Y is expected at 2.5% vs. 2.7% prior and the Median CPI Y/Y is seen at 2.3% vs. 2.4% prior.
The BoC is expected to cut rates by 25 bps at both the last two meetings left for this year, but there’s also a chance that the central bank delivers bigger rate cuts if growth and inflation were weaker than projected as Governor Macklem mentioned last week.
12:30 GMT/08:30 ET - US August Retail Sales
The US Retail Sales M/M is expected at 0.2% vs. 1.0% prior, while the Ex-Autos M/M measure is seen at 0.3% vs. 0.4% prior. The focus will be on the Control Group figure which is expected at 0.3% vs. 0.3% prior.
Consumer spending has been stable which is something you would expect given the positive real wage growth and resilient labour market. We’ve also been seeing a steady pickup in the UMich Consumer Sentiment which suggests that consumers’ financial situation is stable/improving.
