Monday begins quietly, with no significant scheduled economic events for the FX market.
On Tuesday in the U.S., the data releases include PPI m/m, retail sales m/m, pending home sales m/m, the Richmond manufacturing index, and CB consumer confidence.
Wednesday’s focus will be on inflation data from Australia, the RBNZ monetary policy announcement in New Zealand, Japan’s BoJ core CPI y/y, and in the U.S. the unemployment claims, core PCE price index m/m, personal income m/m, and personal spending m/m.
Thursday will be a bank holiday in the U.S. in observance of Thanksgiving Day and on Friday, Japan will release the Tokyo core CPI y/y.
In the U.S., retail sales data continue to surprise to the upside, rising 0.6% in August, driven largely by online purchases. Wells Fargo analysts note that back-to-school shopping provided a boost, but gains were broad-based, with increases also seen in restaurants, auto dealers, and sporting goods stores.
After adjusting for inflation, real sales rose a more modest 0.2%, yet the overall picture still suggests consumers remain more resilient than expected, despite rising prices and higher unemployment.
Retail spending likely cooled to a 0.4% gain in September as higher inflation and slower wage growth put additional pressure on households. Auto sales lost momentum after several strong months, falling to their weakest level since August 2024, which is expected to weigh on the overall spending pace.
Even so, the outlook for holiday spending remains solid. A 0.4% increase in September would be consistent with the average monthly pace seen last year, rather than a sign of deterioration.
In the U.S., the consensus for the CB consumer confidence index is 93.4, down from 94.6 previously. This decline brings the confidence level to its lowest value since April, when new tariffs were introduced. Ongoing uncertainty and a softening labor market continue to weigh on households.
A key source of pressure is job availability with only 27.8% of respondents saying jobs were “plentiful,” which Wells Fargo notes is the weakest level seen since 2017 outside the pandemic period. In addition, more households expect their income to decline over the next six months, rising to 12.5% from 11.7% in September.
Even though the latest nonfarm payroll report didn’t show a major deterioration, financial stress among households persists. That said, there is a chance that confidence may improve in December following the end of the federal government shutdown.
In Australia, the monthly CPI has now become the Bureau of Statistics’ official inflation gauge, meaning both monthly and annual movements will now receive greater attention.
Westpac analysts expect consumer prices to rise 0.1% in October. Because a –0.3% monthly decline from October 2024 drops out of the calculation, the annual inflation rate is projected to climb from 3.5% to around 3.9%.
Although October typically delivers softer inflation readings, the seasonally adjusted figure of 0.5% points to a firmer backdrop compared with last year. This is likely due to a smaller fall in electricity prices, stronger housing-related costs, a milder easing in rents, and an uptick in holiday travel and accommodation.
At this week’s RBNZ meeting, which is the final one for the year, the Bank is expected to deliver a 25 bps rate cut, taking the Official Cash Rate down to 2.25%.
As a reminder, at the October meeting the RBNZ delivered a larger 50 bps cut, reflecting sluggish economic growth and increasing excess capacity, which justified a more forceful move. Recent data has reinforced this view with the Q3 labour market report showing clear signs of cooling, the unemployment rate rising to 5.3%, wage growth losing momentum, and employment falling 0.6% from a year earlier. Although inflation surprised to the upside, analysts argue the lift is temporary.
At this week’s meeting, Westpac analysts see the potential for a downward adjustment of around 30–35 bps to the projected OCR track, bringing the forecast low to roughly 2.20% in early 2026.
The key uncertainties for the Committee will revolve around the near-term path for economic growth and inflation, and how firmly inflation expectations remain anchored. A split vote is also possible if policymakers differ on how quickly to ease, most likely between a 25 bps and a 50 bps cut.
In Japan, the consensus for the Tokyo core CPI y/y is 2.7%, slightly below the prior 2.8%. The previous rise reflected broad price adjustments by firms during the typical autumn repricing period.
Although nationwide inflation also surprised to the upside, core CPI is expected to hover closer to 2.5% toward year-end, supported by firm wage gains. Prime Minister Takaichi is prioritizing measures to curb inflation, strengthen national crisis management, and promote growth-oriented investment. Her plan also includes temporary fuel tax relief and support for lowering energy bills.
Rising tensions with China highlight the need to monitor inbound tourism as well as the resilience of supply chains, Nomura analysis said. In terms of monetary policy, markets still expect the BoJ’s next rate hike in January 2026, though a move as early as December 2025 remains possible. Fiscal policy will also be in focus, with attention on the FY2025 supplementary budget and the upcoming FY2026 budget bill.
