On the Macro
It’s another big week ahead on the economic calendar, with the US inflation, central bank commentary, the BoC, the RBNZ, and euro area forecasts in focus.
For the Dollar:
It is an important week ahead, with the US CPI Report on Wednesday and the Producer Price Index numbers on Thursday likely to influence Fed bets on a September rate hike.
Last week, service sector data and the US Jobs Report gave the green light for the Fed to raise interest rates by 25 basis points this month. However, the jury is out on a rate hike in September.
Other stats include the weekly jobless claims and Michigan consumer sentiment figures that will need consideration.
After the US Jobs Report, investors should also track FOMC member chatter throughout the week. FOMC members Daly, Mester, Bostic, and Kashkari are speaking this week.
For the EUR:
It’s a relatively quiet week for the EUR.
German and Eurozone ZEW Economic Sentiment numbers will be in focus on Tuesday. Recent economic indicators suggest a fall in economic sentiment. However, the numbers may not influence the ECB and its commitment to tame inflation.
On Thursday, the EU Economic Forecasts will move the dial. Downward revisions to growth and inflation could ease bets on a post-summer interest rate hike. The ECB monetary policy meeting minutes (Thurs) will give the markets a viewpoint though sentiment toward the macroeconomic environment has deteriorated since the ECB monetary policy decision.
Other stats include Eurozone industrial production and trade data. While these tend to have a minor impact on the EUR, weak numbers would raise the possibility of an ECB pause.
Finalized inflation numbers for France, Germany, and Spain are also out. We expect investors to brush the finalized numbers aside, barring a material revision to prelim numbers.
Investors should track ECB commentary throughout the week. A shift in hawkish rhetoric would draw interest. ECB President Christine Lagarde (Thurs) and Chief Economist Philip Lane (Wed) are on the calendar to speak and will garner interest.
For the Pound:
It is a busy week ahead for the Pound. The UK Labour Market Overview Report will move the dial on Tuesday. A steady unemployment rate and hotter-than-expected wage growth would keep the BoE under pressure to push interest rates higher.
On Wednesday, the BoE will release the Financial Stability Report ahead of the monthly GDP Report on Thursday.
The BRC Retail Sales Monitor (Tues), NIESR GDP Estimate (Thurs), and the RICS House Price Balance (Thurs) are also out. However, the markets will likely brush aside the housing sector data.
With the economic calendar on the busy side, investors should also consider BoE chatter. BoE Governor Andrew Bailey is on the calendar to speak on Monday and Wednesday.
For the Loonie:
It is a quiet but big week ahead on the economic calendar for the Loonie. Building permits and manufacturing sales data will draw interest on Monday and Friday. However, with the Bank of Canada in action midweek, these are unlikely to influence the Loonie.
Central banks have delivered a few surprises this year. On Wednesday, economists expect the BoC to hike rates by 25 basis points to 5.00%. A 25-basis point rate hike would place the focus on the monetary policy report and BoC speeches.
Out of Asia
For the Aussie Dollar:
It is a quiet week for the Aussie Dollar. Building approvals (Mon) and NAB Business Confidence (Tues) numbers will garner interest. However, we expect the business confidence report to have more impact.
After the surprise RBA hold on monetary policy, RBA Governor Philip Lowe will also be in the spotlight. The RBA Governor is on the calendar to speak on Wednesday. Hawkish chatter would deliver an Aussie boost.
However, economic indicators from China will likely have more impact.
For the Kiwi Dollar:
It’s a big week for the Kiwi Dollar. Electronic card retail sales numbers for June will move the dial on Tuesday. Another weak set of numbers would weigh on the Kiwi ahead of the Wednesday RBNZ interest rate decision.
While a pickup in sales would be Kiwi-positive, concerns over the economic outlook may limit the impact.
However, the RBNZ interest rate decision and rate statement will move the dial. Economists expect the RBNZ to stand pat. Assuming no surprises, the Rate Statement will be the focal point.
For the Japanese Yen:
It is a quiet week for the Japanese Yen. Industrial production will be in focus on Friday. Bearish numbers would support the BoJ’s ultra-loose monetary policy stance.
Out of China
It is a busier week ahead. Inflation numbers for June will kickstart the week. While the headline annual inflation rate will draw interest, the producer price index will also move the dial.
On Thursday, trade data will wrap up the week. Jitters over the economic outlook will increase market sensitivity to the numbers.
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