Friday preview: Yellen speech and US retail sales data in focus

Federal Reserve chair Janet Yellen will be in the spotlight on Friday when she speaks in Boston as the market searches for clues on the timing of the next interest rate hike.

Yellen will speak on ‘Macroeconomic Research After the Crisis’ at 1700 at the Boston Fed conference. Investors will be hoping she provides hints on the direction of the central bank’s policy.

Her remarks will come just two days after minutes of the Fed’s 20-21 September meeting showed it was a close call to keep interest rates on hold, with policymakers generally of the view that a move higher could be on the cards within months if the economy keeps on track.

“Market expectations for a hike in December remain around the crucial 70% level which the Fed has historically sought before raising rates so as to avoid causing any unnecessary turbulence in the markets,” said Oanda’s Craig Erlam.

Meanwhile, US retail sales figures will also be in focus on Friday as the Fed considers the strength of economic data in its policy decisions. Analysts expect the report from the Commerce Department to show retail sales rose 0.6% in September following a 0.3% dip in August.

“As the jobs report was not the smoking gun for the Fed, we are looking forward to Friday when we get retail sales data for September and Fed chair Yellen is due to speak,” according to Danske Bank.

“Both could be important for our Fed call as retail sales have been weak in July and August and since Yellen sounded more dovish at the press conference after the September meeting than the tone in the FOMC statement.”

Friday 14 October

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INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (10:00)
Business Inventories (US) (15:00)
Producer Price Index (US) (13:30)
Retail Sales (US) (01:30)
Retail Sales Less Autos (US) (01:30)
U. of Michigan Confidence (Prelim) (US) (15:00)

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