Softer wage growth reduces disposable income. A downward trend in disposable income affects consumer spending while dampening demand-driven inflationary pressures.
Economists forecast the UK unemployment rate to increase from 4.2% to 4.3% in September. Significantly, economists predict wage growth to soften from 8.1% to 7.4% in the third quarter.
Given the spotlight on the UK labor market, it’s essential to monitor Bank of England speeches. BoE Chief Economist Huw Pill is on the calendar to speak. Monetary Policy Committee member Swati Dhingra will also deliver a speech. Reaction to the labor market numbers warrants consideration.
US Inflation and the Fed in the Spotlight
On Tuesday, the US CPI Report will also garner investor interest. Sticky US inflation could fuel bets on a Fed rate hike. Higher interest rates would raise borrowing costs while reducing disposable income. A downward trend in disposable income would impact consumer spending and ease demand-driven inflationary pressure.
Economists forecast the US annual inflation rate to soften from 3.7% to 3.3% in October. However, economists expect core inflation to remain unchanged at 4.1%.
Beyond the numbers, Fed speakers need monitoring. FOMC members Michael Barr, Loretta Mester, and Austan Goldsbee are on the calendar to speak. Reaction to the CPI Report will influence the appetite for the US dollar.
