China crunches central banks
London - Beijing data to give clues on whether global economy improving or not
The coming week will provide clues on whether the global economy is escaping from its lacklustre growth rut, amid growing concerns of another downturn which central banks have few tools left to fight.
China has become the focal point for economists as they fear a hard landing there could send countries that have only just escaped from the doldrums reeling back into recession.
Beijing will publish September trade data on Tuesday and inflation on Wednesday and any significant deviation from expectations could set the tone for the week.
The deluge of data from China in coming weeks is likely to point to further weakness, reinforcing expectations Beijing will roll out more stimulus measures to ward off a sharper slowdown.
"After the past few turbulent weeks and continued concerns with regard to the world's second largest economy, the data will also attract great attention in view of GDP figures due out on October 19," said economists at DZ Bank.
In the eurozone, final inflation numbers for some member countries will be published during the week with the bloc's reading on Friday expected to confirm prices fell 0.1 per cent annually last month. Since March the European Central Bank has been pumping ?60 billion a month into the economy as part of its battle to drive up inflationary pressures but the programme has so far failed to spark price rises.
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> On Tuesday and Wednesday, Beijing will publish September trade and inflation data, respectively, and any significant deviation from expectations could set the tone for the week.
> On Wednesday, US retail sales numbers will be published ahead of Friday's industrial production and consumer sentiment data. Inflation numbers are due on Thursday.
> On Friday, final inflation numbers for some member countries of the eurozone will be revealed.
Expectations are that it will eventually have to be extended beyond its planned completion date. "We think additional ECB easing is in the pipeline," said Martina von Terzi at UniCredit.
"New stimulus is likely to reflect the ECB's heightened risk aversion, increasing awareness by the Governing Council that the bank's inflation projections are too optimistic, and the need to counter upward pressure on the euro."
But with the ECB's next rate meeting fast approaching, most bets have already been made and the hawks seem to be winning, so there may not be any extension or expansion of quantitative easing for now.
Next week some of the ECB's biggest guns are speaking so if their thinking is shifting, it will be the time to send fresh signals before the October 22 gathering of rate setters in Malta.
In contrast, other major central banks long ago set the printing presses running to flood their economies with newly-created money, spending around $7 trillion to defend themselves during the global financial crisis.
Indeed, markets are now focussing on when the US Federal Reserve pulls the trigger and tightens policy for the first time in nearly a decade after it took a pass last month.
Subsequent economic data has shown a sharp slowdown in hiring by US employers.
Retail sales numbers on Wednesday ahead of industrial production and Michigan consumer sentiment on Friday will indicate if there is still a chance of a rise this year.
Inflation data is due on Thursday and four voting members of the Federal Open Market Committee also speak next week. - Reuters