AUSFOREX welcomes the battle between inflation, interest rates and central banks this week, with the finale of non-farm data

From Washington to Frankfurt, policymakers are ushering in the final quarter of 2023 with cautious optimism about progress in efforts to combat inflation.

From Washington to Frankfurt, policymakers are ushering in the final quarter of 2023 with cautious optimism about progress in efforts to combat inflation.

With numerous Federal Reserve and European Central Bank heads due to speak in the coming week, investors should keep a close watch on their reaction to a flurry of data from the Transatlantic (600558), which hints at some promising signs.

Last Friday's report showed that euro zone core inflation, which strips out volatile factors such as energy, was at its lowest level in a year, hours after the Federal Reserve's preferred measure of underlying price growth showed the smallest increase since 2020.

Central bankers will see another round of data from the data series, as well as other inflation data, before the November 1 decision, and the data released so far could allow them to start building a case for not raising rates.

The European Central Bank will not have more complete inflation data for September until after its October 26 meeting, while the October report and third-quarter growth estimates are both scheduled after the meeting.

No further increases in borrowing costs are expected in October, and Friday's report could begin to weaken the ECB's incentive to raise interest rates in December.

PowellA roundtable discussion with workers and small and medium business leaders will be held on Monday with Philadelphia Federal Reserve Bank President Patrick Hackel.

President of the European Central BankLagardeA welcoming speech for a conference hosted by the agency will be given on Wednesday. Deputy governor Luis de Guindos will speak in Cyprus on the same day. Other speakers this week include chief economist Philippe Lann and central bank governors from Germany and France.

"The ECB may have stopped raising interest rates. Many measures of underlying price inflation are falling, surveys show a marked deterioration in economic activity and credit expansion is weaker than the lowest levels of the European debt crisis. However, it will still take a long time for the ECB to gain enough confidence to cut rates," said David Powell, senior economist.

In addition, there will be several central banks around the world making decisions,Interest rates from Australia to IndiaProbably won't change.

United States and Canada

This week's economic data includes two important reports on the state of employment. Tuesday's August JOLTS report and Friday's September non-farm payrolls report are expected to show a significantly looser labor market.

According to the forecast, the ratio of job openings to unemployment, a key measure of labor market tightening by the Federal Reserve, could fall to 1.4.

Data from the private sector will also be of interest.

On Monday, the Institute for Supply Management's manufacturing index is expected to show an 11th straight month of contraction. On Wednesday, the ISM's service activity index is expected to show slightly slower growth.

In addition, on Wednesday, data from ADP Research is expected to show a slowdown in private sector job growth.

In the North, Bank of Canada Deputy Governor Nicholas Vincent will address the Montreal Chamber of Commerce as the central bank weighs in on the recent rise in inflation against the backdrop of slowing economic growth.

The September jobs data will provide an important guide for the central bank, as the August report far exceeded expectations, with job growth twice as high as expected and annual wage growth of 5.2%.

Asia

China's week-long holiday will be a litmus test of how much people are willing to travel and spend, after Saturday's purchasing managers' index data showed manufacturing activity expanding for the first time in six months, another sign that parts of the economy are finding their footing again.

On Sunday, South Korea's trade data will provide a sign of whether global trade is recovering. On Monday, PMI data will be released, including data from Indonesia, Malaysia, Thailand and Vietnam.

The Bank of Japan's Tankan data will be released on Monday, indicating an update on business confidence, while the weekend's Japanese wage data could have implications for monetary policy depending on how far wage growth continues to lag inflation, a key concern for the central bank

Oceania

On Tuesday, the Reserve Bank of Australia will hold its first meeting under new governor Michelle Block, and central bankers are expected to keep interest rates steady. The board is likely to discuss the possibility of some form of quantitative tightening.

Next up is New Zealand's central bank interest rate decision, due on Wednesday. Analysts expect no change there, and neither does the Reserve Bank of India on Friday. Thailand, the Philippines and South Korea will release inflation data this week.

EMEA

The Bank of England's Policymakers Panel survey, to be released on Thursday, provides officials with information on cost pressures in the economy. Among the policymakers scheduled to speak in the coming week are Catherine Mann and Ben Broadbent, deputy governor.

Eurozone industrial data could be cause for concern, with German exports and orders due this weekend and French production data due on Thursday.

Swiss inflation is likely to rise to the central bank's 2% ceiling in Tuesday's release.

In northern Europe, Sweden's Riksbank will on Monday publish meeting notes on its recent decision to raise interest rates and keep them higher, while keeping the possibility open.

Across Europe and elsewhere, multiple interest rate decisions are planned.

On Tuesday, according to a survey of analysts, Turkish data may show that inflation accelerated to 61% in September. Although the Turkish central bank raised interest rates sharply to deal with the country's cost of living crisis, it was not enough to stop inflation.

Iceland's central bank will decide on Wednesday whether to extend the longest cycle of rate rises in western Europe, with some banks believing there could be room for a quarterly increase.

On the same day, Poland's central bank is likely to cut borrowing costs again at its last policy meeting before parliamentary elections, but the decision is uncertain after a surprise 75 basis point rate cut in September caught investors off guard.

Romania's central bank is expected to keep borrowing costs unchanged at 7% the next day as inflation approaches 10%.

On Friday, the National Bank of Serbia is likely to keep its main interest rate at 6.5 percent while inflation is falling.

Africa

Turning to Africa, Kenya's central bank is likely to leave its 10.5% interest rate unchanged on Tuesday. Governor Kamau Tug said officials believe inflation will be between 5.5% and 6% by the end of the year due to lower food prices and lower fuel consumption