Week Ahead for FX, Bonds: U.S. Inflation Data Could Give Clues on Rate-Hike Prospects

By Dow Jones Newswires staff

Below are the most important global events likely to affect FX and bond markets in the week starting Nov. 9.

U.S. inflation data for October will be closely watched as investors continue to digest the implications of the recent Democratic sweep in the U.S. midterm elections for the conflict in the Middle East, oil prices, and technology and AI-linked stocks.

In Europe, gross domestic product data from the eurozone and U.K. are due, while in Asia, China's inflation and trade figures will be in focus.

U.S.

Consumer-price inflation data for October are due Tuesday. This, alongside producer-price inflation figures on Friday and various speeches from Federal Reserve policymakers, will be closely watched as investors gauge the likelihood of another interest-rate hike in December.

More evidence of elevated inflation would make a hike on Dec. 9 look likely, especially following recent strong October jobs figures. U.S. money markets currently price a 75% probability of another quarter-point Fed rate increase next month, LSEG data show.

"Barring a major downside surprise in Tuesday's October CPI release, or in the November jobs report on December 4, we expect a 25 basis-point hike to be near fully priced by the time the Committee meets next month," Nick Rees, head of macro research at Monex, said in a note.

Analysts at ING said they expect both headline and core U.S. CPI inflation rates to rise by 0.3% month-on-month, strong enough to leave a December hike looking likely.

Other data during the coming week include weekly jobless claims and October existing home sales data on Thursday.

Bond markets will be closed on Wednesday during Veterans Day, although stock markets will be open.

Canada

The minutes for the Bank of Canada's most recent meeting, when it raised its key interest rate by a quarter point to 2.5%, will be released Tuesday, where investors will look for clues on its next move.

A follow-up rate hike in December is possible, although policymakers could be concerned about recent weak Canadian jobs data. Money markets priced a 37% chance of a December hike.

Oxford Economics expects the central bank will proceed with another rate hike in December before opting for a prolonged pause.

"We believe the BOC's aim is to quickly return the policy rate to a neutral 2.75% level to better balance the risks around inflation from persistently high oil prices, not to tighten rates into restrictive territory," Oxford Economics' Michael Davenport said in a note.

Eurozone

The eurozone's flash estimate of third-quarter gross domestic product will be released Friday and will be the main focus in an otherwise quiet week for data.

"We think both the Federal Reserve and European Central Bank will opt for one more hike...but data on the impact of elevated energy prices is critical for policymakers," Investec economist Lottie Gosling said in a note.

Other data due include German September trade figures Monday, plus final CPI inflation data for October from Germany on Wednesday and France on Friday.

U.K.

U.K. gross domestic product figures for the third quarter will be released on Thursday, giving a picture of how the economy is performing.

This data comes after the Bank of England raised interest rates by 25 basis points to 4.0% in a recent decision and warned that at least one more increase was likely. Monetary policy committee member Catherine Mann surprised markets by voting to increase rates by 50 basis points.

The BOE said in its accompanying statement that recent economic activity data have generally been stronger than expected, adding to the case for "modestly tighter" monetary policy.

"U.K. monthly GDP had a startlingly robust run recently, beating consensus forecasts for four months running," Investec economist Sandra Horsfield said in a note. Economic activity has held up well despite rising energy prices and borrowing costs recently, she said. However, Investec expects September to reveal "a more subdued picture for output."

September industrial production and trade figures will also be released Thursday, while a number of BOE policymakers are due to speak during the week.

Japan

Investors will closely examine remarks from Bank of Japan policy board member Toichiro Asada on Thursday. Asada is known as a dovish member of the board and voted against an interest-rate increase in September.

A summary of opinions from the BOJ's October meeting, due Tuesday, could provide hints on the timing for further monetary tightening. Household spending figures will also be released Tuesday.

The Ministry of Finance is scheduled to auction 30-year and five-year government bonds on Tuesday and Thursday, respectively.

On Wednesday, the BOJ plans to conduct JGB-buying operations for bonds with maturities of one to three years, five to 10 years, and 10 to 25 years.

China

Inflation and exports will pull the most focus among China watchers, who are looking for signs of improvement in demand that could balance growth drivers concentrated in trade.

October's consumer and producer price indexes, due Monday, will likely continue to show strong supply-driven pressure and weak domestic demand.

ING economists expect CPI inflation to edge down to 0.8% on the year, with PPI inflation rising again to 5.3%. That would mark a new high for PPI after a surge in September fueled by the fallout of the Middle East war and the artificial-intelligence investment boom.

Although Beijing might experience some sense of relief from the end of deflation, it may not take much comfort from the fact that China is a net importer of chips and the world's largest net importer of energy, Nomura economists said.

"We believe Beijing will maintain proactive fiscal spending and accommodative monetary policy to address exceptionally weak domestic demand," Nomura said.

On Tuesday, attention turns to October's trade figures.

Markets will remain on alert for further moves by the People's Bank of China, which moved to slow the pace of the yuan's appreciation in a sign of limited tolerance to the currency's rapid ascent against the dollar. Chinese government bond yields are also on the decline, something that could rekindle concerns among policymakers.

Australia / New Zealand

The week ahead in Australian bonds will be led by events in Treasurys and any further weakness in U.S. tech stocks. Concerns that the Democrat-dominated Congress will move to regulate the artificial intelligence sector and push back on data center developments are fueling a flight to bonds.

The yield on Australia's 10-year government bond appears set to keep falling, having already dropped below 5.0% to the lowest level since late August.

Still, traders caution that the U.S. is unlikely to slow AI development too far given intense global competitive pressures.

Locally, a speech by the Reserve Bank of Australia Chief Economist Sarah Hunter on Monday will be a key focus for traders. The RBA has raised interest rates five times this year, and the official cash rate is now at its highest level in 18 years. Scenarios exist that may see policy continue to tighten.

Inflation remains well above the RBA's desired levels while capacity pressures persist across the economy.

In New Zealand, markets will adjust based on the general election winners on Saturday, Nov. 7. But whoever wins will still be faced with the problem of rising unemployment, and an uncertain geopolitical world.

Philippines

The Philippines will release third-quarter gross domestic product figures Monday, with growth expected to have picked up modestly.

The economy likely expanded 2.7% from a year earlier, compared with 2.3% in the second quarter, according to the median estimate of five economists surveyed by The Wall Street Journal.

The improvement would represent a gradual recovery from the weak second quarter rather than a strong rebound, Maybank Investment Bank economist Azril Rosli said.

Government spending and resilient exports likely supported growth, while elevated inflation and borrowing costs continued to constrain household consumption, he said.

Taiwan

Taiwan is due to release its October trade data on Monday. The island's exports growth, closely tied to U.S. hyperscalers' AI hardware demand, likely remained robust but has cooled a bit from September's 60.9% jump. Economists' estimates range from 44% to 59%.

However, the key focus will be if the island can sustain the momentum into 2027. The global AI cycle is already expected to settle into a more normal pace into next year, as higher interest rates lift capital costs and U.S. midterm election results heighten regulatory uncertainty, DBS economists said in a note.

India

India's October consumer-price figures, due Thursday, could reinforce expectations of another interest-rate increase as higher food costs push inflation toward the top of the central bank's target range.

DBS expects headline inflation to rise to 6.0% from a year earlier, compared with 5.5% in September, reflecting higher food prices and a low year-earlier comparison base.

Prices of cereals, edible oils and vegetables likely added to inflation pressures, while easing precious-metals prices and delays in passing through fuel-price changes to consumers provided some relief, the bank said.

DBS also expects core inflation, which excludes food and fuel, to rise to between 4.5% and 4.6%, partly as services prices increase and the effects of earlier indirect-tax changes drop out of the annual comparison.

With inflation expected to exceed the upper end of the Reserve Bank of India's target range, DBS forecasts a second consecutive rate increase in December. However, falling oil prices have eased market concerns about more aggressive tightening, the bank said.

Any references to days are in local times.

Write to Jessica Fleetham at jessica.fleetham@wsj.com and Jihye Lee at jihye.lee@wsj.com

(END) Dow Jones Newswires

November 08, 2026 16:14 ET (21:14 GMT)

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