The Week Ahead – Monetary Policy, Trump and Trade in Focus
On the Macro
For the Dollar, economic data through the week includes the market’s preferred August ISM manufacturing and non-manufacturing PMI numbers due out on Tuesday and Thursday, July trade figures on Wednesday, ADP nonfarm employment change figures on Thursday ahead of the government’s August labour market figures on Friday. Outside of the data, a wave of FOMC members will be speaking, while the Oval Office will influence on trade. The Dollar Spot Index ended the week down 0.01% at $95.14.
For the EUR, stats through the week include August private sector PMI numbers due out on Monday and Wednesday, July retail sales figures out of the Eurozone on Wednesday, Germany factory orders on Thursday, with finalized 2nd quarter GDP numbers out of the Eurozone and German trade and industrial production figures on Friday. Focus will likely be on the stats out of Germany, barring material deviation from prelim private sector and GDP numbers. The EUR/USD ended the week down 0.17% to $1.1602.
For the Pound, Stats through the week include August private sector PMI numbers due out on Monday through Wednesday, with Monday’s manufacturing and Wednesday’s service PMI numbers the key drivers for the Pound on the data front. Outside of the numbers, Carney will influence the Pound on Tuesday, with Brexit chatter to also influence. The GBP/USD ended the week up 0.89% to $1.2960.
For the Loonie, stats include 2nd quarter labour productivity and July trade figures on Wednesday, July building permits on Thursday and August employment and PMI numbers due out on Friday. Outside of the stats NAFTA talks and Wednesday’s interest rate decision will be in focus. The Loonie ended the week down 0.11% to C$1.3040 against the U.S Dollar.
Out of Asia, it’s relatively busy week ahead.
For the Aussie Dollar, economic data is on the heavier side, with key stats including July retail sales and 2nd quarter company profit figures on Monday, 2nd quarter GDP numbers on Wednesday, July trade figures on Thursday and home loan figures on Friday. While GDP, trade and retail sales figures will impact, the RBA interest rate decision on Tuesday will have an influence, as will manufacturing PMI numbers out of China on Monday and trade war chatter. The AUD/USD ended the week down 1.91% to $0.7189.
For the Japanese yen, data is on the quieter side, with key stats limited to 2nd quarter capital spending due out on Monday and July household spending figures on Friday. Direction through the week will ultimately come down to risk appetite through the week. The Japanese Yen ended the week up 0.19% to ¥111.03 against the U.S Dollar.
For the Kiwi Dollar, there are no material stats scheduled for release, leaving the Kiwi in the hands of risk appetite driven by trade and private sector PMI numbers out of China. The Kiwi Dollar ended the week down 0.72% to $0.6622.
Out of China, stats include August manufacturing and service sector PMI numbers due out on Monday and Wednesday, with August trade data due out after the markets close on Saturday. The markets will be looking for signs of further weakness in the manufacturing PMI, with focus likely to be on new orders and new export orders in particular, softer numbers likely to have the markets edgy ahead of Saturday’s trade data. Outside of the data, expect some more trade war chatter.
Brexit: Brexit chatter through the week will continue to be in focus, any negative chatter likely to overshadow any upbeat stats through the week.
Loonie Woes: With no conclusion to NAFTA talks by Friday’s deadline, talks are to this week, with NAFTA chatter to influence the Loonie through the week.
U.S – China Trade War: No progress and more tariffs, with the threat of Trump bailing on the WTO. An ever present risk that can jolt the markets at any time.
Iran: Crude oil exports are on the slide as importers shun Iran in fear of being added to Trump’s trade enemy list. Talks of relocating missiles and building a new missile factory in the region will keep the markets watchful through the week. An Iran withdrawal from the nuclear agreement would make things interesting…
Turkey: While a lack of action on the release of prisoners left the markets focusing on trade through the week, risks continue to linger, with the Turkish Lira still down 72.2% year-to-date.
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- U.S. Global Trade Disputes: The Past, The Present, The Future
- Did Powell Put Stocks Back Inside A Bubble?
On the monetary policy front, it’s a particularly busy week ahead…
- For the Aussie Dollar: The RBA interest rate decision and release of the rate statement on Tuesday will be in focus, with the ongoing trade war and some disappointing employment, consumer confidence and 2nd quarter new CAPEX numbers for the RBA to consider. Whether the RBA can continue to remain hawkish remains to be seen, with some political uncertainty now also there to consider.
- For the Loonie, the Bank of Canada interest rate decision and rate statement on Wednesday will be in focus. Whether the BoC maintains its hawkish stance remains to be seen, with a lack of growth in June dampening the impact of the acceleration in 2nd quarter economic growth. Since the previous interest rate decision, falling June wholesale and retail sales will also be considered on the downside, while positive July employment numbers and pickup in the annual rate of inflation to 1.6% will provide support for a rate hike before the end of the year should economic indicators continue to point to robust growth and suggest that June was just a blip.
- For the U.S. Dollar, while the FED is not scheduled to meet until 25th September, a wave of FOMC members are due to speak through the week, with members Evans, Williams, Kashkari, Bostic, Mester, Kaplan and Rosengren in the diary. With a September rate hike priced in, any dovish commentary could see the Dollar take a dive.