Euro zone inflation, U.S. jobs set to dominate

Fri Sep 25, 2015 11:06am EDT
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By Catherine Evans

LONDON (Reuters) - Euro zone inflation and U.S. jobs data will offer clues to the health of major developed economies in the coming week while the malaise gripping emerging markets is expected to prompt India to cut interest rates.

China may release monthly foreign exchange reserve data indicating how much more the central bank has spent on steadying the yuan following Aug. 11's surprise devaluation.

Catalans vote on Sunday in a regional election which separatist parties are framing as a proxy referendum on independence from Spain while polls point to no clear winner in Portugal's Oct. 4 election.

Wednesday's flash reading of September's annual euro zone inflation is expected at zero, although core inflation, which excludes volatile energy prices, is seen at 0.9 percent for a third consecutive month.

A negative headline inflation reading, which would be the first since March, would fuel speculation about further European Central Bank stimulus, six months after the euro zone's central bank launched a 1 trillion-euro-plus asset-purchase program.

On Wednesday, however, a surprisingly hawkish-sounding Mario Draghi said the ECB needed more time to assess whether China's slowdown, particularly its impact on commodity prices, cheap oil and a rising euro, would slow inflation further.

Even if inflation turns negative again, deflation risks remain low, Unicredit analysts said in a note, with a fading of the base effect from 2014's plunge in energy prices likely to push the headline rate higher by year-end.

Friday's non-farm payrolls data is expected to show the U.S. economy added 203,000 jobs in September with the unemployment rate holding steady after falling in August to 5.1 percent, its lowest since April 2008. Wage growth, a focus for Federal Reserve policymakers, also accelerated last month.   Continued...

People wait in line to enter a job fair in New York August 15, 2011. 
REUTERS/Shannon Stapleton