US data watched closely to assess loss in momentum

Market participants will be looking for clues about the US growth outlook after a series of weak data, including the disappointing employment report, point towards a loss in momentum. Recent data have weighed on the tracking estimate of Q3 GDP, which is now a mere 1.2%, and has pushed back market expectations of a Fed hike well into H1 16. These developments weighed on the USD last week; the greenback is expected to continue losing some ground this week as positioning corrects. 

"We maintain our medium-term view on the USD as the currency has superior returns to capital and safe-haven characteristics, and the US economy is the most likely to generate sustained growth and inflation", says Barclays.

This week's data releases will allow us to assess the resilience of the American consumer, one of the main drivers of growth. On Wednesday, September core retail sales is expected to grow above-consensus at 0.5% m/m (cons. 0.3%), although a lower reading expected for the headline figure (0.1% versus consensus 0.2%), which is affected by gas prices. On Friday, October's University of Michigan consumer sentiment is expected to improve to 89.5 from 87.2 last month (consensus: 89). 

In addition, the release of September CPI data on Thursday will be watched closely as it will provide clues on the likely path of inflation and Fed's lift-off. The consensus expect core inflation to print 0.1% m/m (1.8% y/y) and a headline reading of -0.2% m/m (-0.1% y/y). On the production side, we receive October's Empire State manufacturing index on Thursday (-12 versus consensus -6) and September industrial production on Friday (-0.1% m/m; consensus: -0.2% m/m).