Events to Watch - Eurozone Inflation, Unemployment, Canada GDP and US Personal Income & Spending

BOJ meeting - October: The Bank of Japan is expected to keep its policy rate at 0.1% in October. It's also likely that the central bank will not extend the outright purchases of CP and corporate bonds. However, the special fund-supplying operations may be extended to March.

The BOJ will also release the Outlook Report with the first assessment of 2011 growth. Policymakers will retain the view that 'there are prospect for the economy to return to a sustainable growth path with price stability in the longer term'. Median projections for real GDP will be around -3.3%, -1.2% and +1.2% in 2009, 2010 and 2011 respectively. Core CPI should be around -1.4% -1% and -0.5% in 2009, 2010 and 2011 respectively.

Eurozone HICP - October (Flash): Flash HICP should have climbed to -0.1% yoy in October, after falling -0.3% in the previous month, as driven by surge in energy prices. Apart from energy component, price levels in other areas were quite stable although weakness can be seen in services sector.

Eurozone Unemployment - September: Unemployment rate probably rose to 9.7% in September from 9.6% a month ago. The number of unemployment should have increased by 155K during the month. Employment component of PMI fell for the first time in 5 months in September, suggesting the job market may resume contraction in coming months.

Canada GDP - August: Headline GDP should have climbed +0.1% mom in August. Together with the sluggish readings of 0% and +0.1% in July and June respectively, economic outlook in Canada remained sluggish. In August, accommodation/food services, construction and utilities probably showed improvements. However, these offered little help to overall economic growth. Manufacturing and agricultural sectors are anticipated to contract during the month. That said, GDP should show stronger expansion in 4Q09 as indicated by leading indicators. Moreover, growth in the US should help boost economy in Canada.

US Personal Income and Spending - September: Personal income should have eased to +0.1% in September as the weak employment report suggested softening in employee compensation during the month. Personal spending is expected to have dropped -0.5% after rising +1.3% in September. As the cash for clunker program ended, unit auto sales dropped -35%. The decline triggered a -0.7% drop in real consumption. However, retail sales excluding auto sales and gasoline were actually robust over the past 2 months.

Core PCE deflator probably rose +0.2% mom in September as driven by +0.16% mom increase in core CPI. This should have driven a +1.3% yoy increase in core PCE deflator.