The Top Events/Releases for next week
Upcoming Week - The Big Three
With the presumed choice of the establishment conservative Indiana Governor Pence as Trump's running mate, the Republican ticket is now set going into the RNC convention next week. The national polls are beginning to tighten, suggesting a close race at start of the general election, and the momentum gained from the party convention could potentially catapult the Trump campaign into the lead by the kick-off of the Democratic party convention the following week.
The simultaneous release of CPI and retail sales will compete for the market's attention. While both data points are arguably less relevant following on the heels of the revised forecasts presented by a very much on hold Bank of Canada, a wider initial distribution of expectations for CPI creates a greater potential for a more outsized reaction. Any major shock to retail sales in May will likely be attributed to the wildfires in Northern Alberta and therefore not have as lasting of an impact on the market.
After a post-winter burst of positive momentum, the US housing market recovery shifts into a consolidation mode in June with both homebuilding and sales activity slipping modestly. During the month, TD expects existing home sales to dip 2.5% m/m, ending five consecutive months of gains. Despite the decline, the level of sales activity will remain 15% above the November trough, underscoring the sustained rebound in housing market activity since last year. Residential construction activity should also drift lower, falling 2.7% m/m to 1118K units.
Markit will release Flash UK PMIs alongside its euro area releases, and we expect the July numbers to show a sharp deterioration as post-Brexit uncertainty kicks in. We look for about 5 points off each of the manufacturing and services series, which would make that their biggest one-month declines in the series, though by no means does it put the levels at record lows.
This month’s ECB meeting should be a rather non-eventful one, with the ECB still in implementation mode. Markets will be watching for how the ECB sees the fallout from Brexit, but there we think they may be disappointed if they’re looking for strong signs of further easing to come just yet. We think that another rate cut is still a good bet before year-end, but there’s no immediate need to act with market conditions having held up better than we had expected and only modest downgrades to EZ growth forecasts. If anything, Draghi is likely to raise the fact that if the BoE hasn’t even responded yet and the implications there are clear, there is doubtful a need for the ECB to think about how it might need to tweak its policy.
Sectoral indicators such as John Lewis sales suggest June retail sales held up relatively well through the pre-Referendum period, and generally speaking, it was firms and not consumer who were the most cautious pre-Brexit. But uncertainty over this release is high. The survey period covered up to July 2nd, and therefore includes a disproportionate period of high post-Referendum uncertainty, which could weigh on monthly growth.
The 5 July Board meeting statement was near-identical to the prior month, save for a nod to the uncertain outlook following the Brexit vote. There was no explicit easing bias and there was scant jawboning of the currency. The RBA appears comfortable with the medium-term positive impact of currency depreciation and low interest rates on economic growth. A lack of explicit easing bias was a surprise to many in the markets, seen as a necessary precursor to an August cut.
Fuel accounts for half of our expected jump for the quarter. It is difficult to see inflation accelerate from here as 45% of CPI is tradable, and the TWI keeps going from strength to strength. We don’t see a shock low CPI print as a trigger for an August cut as Deputy Governor Spencer told us that an even lower OCR exacerbates financial stability risks. Our full preview is here.
The impact of the uber-hawkish RBNZ Spencer saw us (and others) push our Aug RBNZ cut into Nov, awaiting new macro -prudential tools. This unusual mid-MPS “economic assessment” is likely to be 5-6 paragraphs without a OCR comment. Will Wheeler talk down the currency, or will he highlight the risks of a housing bubble? No-one knows, but the market thinks the RBNZ is preparing for an August cut.5 Things to Watch on the Economic Calendar This Week
1. European Central Bank policy meeting
The European Central Bank's interest rate decision is due at 11:45GMT, or 7:45AM ET, on Thursday, with most of the focus likely to be on President Mario Draghi's press conference 45 minutes after the announcement.
The consensus is that the ECB will leave interest rates on hold, while Draghi is forecast to strike a dovish tone and perhaps hint at further stimulus to offset the hit to the economy from Britain's decision to leave the European Union.
2. Flash euro zone PMIs for June
The euro zone is to publish preliminary data on manufacturing and service sector activity for July at 08:00GMT, or 4:00AM ET, on Friday, amid expectations for a modest decline.
Ahead of the euro zone PMI's, France and Germany will release their own PMI reports at 07:00GMT and 07:30GMT respectively.
3. German ZEW business survey
The ZEW Institute will publish its July German business climate index at 09:00GMT, or 5:00AM ET, on Tuesday, amid expectations for a sharp deterioration from 19.2 to 9.1, as the Brexit shock hit business confidence. The current conditions index is also forecast to decline, from 54.5 to 52.0.
4. U.K. CPI, employment & retail sales data
The U.K. Office for National Statistics will release data on consumer price inflation for June at 08:30GMT, or 4:30AM ET, on Tuesday. Analysts expect consumer prices to rise 0.4%, after increasing 0.3% a month earlier.
At 08:30GMT, or 4:30AM ET, Wednesday, the ONS will publish the latest jobs report. The amount of people receiving jobless benefits is expected to rise by 4,000 in June, with the unemployment rate holding steady at 5.0%, while wage growth including bonuses is forecast to rise 2.3%.
On Thursday, the ONS will produce a report on June retail sales at 08:30GMT, or 4:30AM ET, amid expectations for a decline of 0.6% last month. Core sales are forecast to fall 0.7%, as British consumers are thought to have slowed down on their purchases both before and after the referendum.
The U.K. will close out the week with a reading on July manufacturing sector activity at 08:30GMT, or 4:30AM ET, Friday. The manufacturing PMI is forecast to inch down to 49.4 from 52.1 a month earlier.
The Bank of England held off from cutting rates last week, but hinted that it will ease monetary policy at its next meeting in August as it devises the exact size and nature of its stimulus measures.
5. U.S. housing data
The Commerce Department is to publish a report on housing starts and building permits for June at 12:30GMT, or 8:30AM ET, on Tuesday. The data could show that permits rose 0.6% to 1.150 million last month, while housing starts are forecast to inch up 0.5% to 1.170 million.
On Thursday, the National Association of Realtors is to release data on existing home sales for June at 14:00GMT, or 10:00AM ET, amid forecasts for a decline of 0.7% to 5.47 million.
The U.S. Labor Department will release its July nonfarm payrolls report at 12:30GMT, or 8:30AM ET, on Friday.
The consensus forecast is that the data will show jobs growth of 175,000, following an increase of 287,000 in June, the unemployment rate is forecast to hold steady at 4.9%, while average hourly earnings are expected to rise 0.2% after gaining 0.1% a month earlier.
An upbeat employment report will point to an improving economy and support the case for higher interest rates in the coming months, while a weak report would add to uncertainty over the economic outlook and push prospects of tighter monetary policy further off the table.
2. Bank of England rate decision
The Bank of England will release its rate decision, minutes of its Monetary Policy Committee meeting and its quarterly inflation report at 11:00GMT, or 07:00AM ET, on Thursday. BoE Governor Mark Carney will address the financial press at 11:30GMT, or 7:30AM ET.
A Reuters poll of economists published on July 26 predicted the British central bank would cut its benchmark interest rate to 0.25% from 0.50%, but most said it would not revive its massive bond-buying program for now.
Expectations for more easing mounted after BoE Governor Mark Carney recently suggested interest rate cuts and additional stimulus will likely be needed over the summer to offset the hit to the economy from Britain's decision to leave the European Union.
3. China manufacturing PMIs
The China Federation of Logistics and Purchasing is to release data on July manufacturing sector activity at 01:00GMT on Monday, or 9:00PM ET Sunday, followed by the Caixin manufacturing index at 01:45GMT, or 9:45PM ET.
The official China's manufacturing purchasing managers' index is forecast to remain unchanged at 50.0 in July, while the Caixin survey is expected to inch up to 48.7 from 48.6 in the preceding month. A reading below 50.0 indicates industry contraction.
4. U.S. ISM PMI surveys
The U.S. Institute of Supply Management is to release data on July manufacturing activity at 14:00GMT, or 10:00AM ET, on Monday. The gauge is expected to inch down 0.2 points to 53.0. Anything above 50.0 signals expansion.
Meanwhile, the ISM is to report on July service sector activity on Wednesday, amid expectations for a modest decline.
5. Reserve Bank of Australia Rate Decision
The RBA's latest interest rate decision is due on Tuesday at 4:30GMT, or 12:30AM ET. Most economists expect the central bank to cut interest rates to a historic low of 1.50% from 1.75%, in an effort to boost sluggish inflation.
Monday, August 1
China is to publish its official manufacturing and non-manufacturing PMIs and the Caixin manufacturing index.
The U.K. is to release data on manufacturing activity.
Later in the day, the U.S. Institute of Supply Management is to release data on manufacturing activity.
Tuesday, August 2
New Zealand will release a report on quarterly inflation expectations.
The Reserve Bank of Australia will publish its interest rate decision.
The U.K. is to release data on construction activity.
The U.S. is to report on personal income and spending.
Wednesday, August 3
China is to publish the Caixin service sector index.
The U.K. is to release data on service sector activity.
The U.S. is to release the monthly ADP nonfarm payrolls report, while the ISM will publish its non-manufacturing index.
Thursday, August 4
Australia will release data on monthly retail sales.
The BoE is to announce its monetary policy decision and publish the minutes of its policy meeting. The central bank will also produce its quarterly inflation report. BoE Governor Mark Carney will address the financial press afterwards.
The U.S. is to release data on initial jobless claims as well as factory orders.
Friday, August 5
The Reserve Bank of Australia will publish its monetary policy statement, which provides valuable insight into the bank's view of economic conditions and inflation.
Canada will release its monthly employment report as well as data on the trade balance.
The U.S. is to round up the week with the closely watched nonfarm payrolls report.
Top 5 economic releases and events for the week starting August 8th
Week of August 8th to August 12th
- RBNZ interest rate decision (5 PM ET/2000 GMT Wednesday) - The Reserve Bank of New Zealand will announce there interest rate decision on Thursday (locally in New Zealand). All 15 economists surveyed by Bloomberg are expecting a cut of 25 basis points to 2.0% from 2.25%. With the RBA easing conditions this week to 1.5% from 1.75%. In an interesting twist, the decision will be announce on Twitter and not released during a normal briefing before the release time. The reason is the March statement was released by a reporter before the official release time.
- UK Manufacturing Production (4:30 AM ET/1130 GMT). The UK manufacturing production data for the month of June will be released on Tuesday. The expectation if for a -0.2% MoM. The data is for the month of June. Going forward, the markets will be more focused on the UK data. Although this is for June, it will be a baseline for before and after Brexit.
- US Retail Sales. (Friday, 8:30 AM ET/1130 GMT). The US retail sales report for the month of July will be released with the expectations for the headline to show a +0.4% gain, the control group +0.3% (vs +0.5% last month), Ex Auto +0.2% (vs. +0.7%) and Ex Auto and Gas (+0.4% vs +0.7% last month). We have jobs. Will we get spending?
- China Trade Balance (Monday): China trade balance is tentatively expected to be released on Sunday in the US/Monday in China. The expectations is for a surplus of $47B/CNY 312B.
- German GDP 2Q (Friday 2 AM ET/0600 GMT). Germany Prelim GDP for the 2Q will be released on Friday. The expectation is for a slowing to 0.2% from +0.7% in the 1Q. the EU Flash GDP will also be released on Friday with estimates for a 0.3% gain.
Top 5 Economic Calendar Events for August 15–19
1. US Federal Reserve Minutes
The US Federal Reserve Open Market Committee (FOMC) minutes will be released on Wednesday August 17th at 14.30 EST.
The FOMC minutes from July’s meeting will be analysed very closely with a notable focus on hints surrounding future policy decisions.
The Fed statement from July’s meeting stated that near-term risks to the economic outlook had diminished. In part, this was clearly related to reduced concerns surrounding the labour market following the much better than expected employment data released at the beginning of July.
Markets will want greater clarity on which risks had diminished and some indications on the scale of improvement and overall balance of risks within the economy.
Looking at the international outlook, the comments on China will be important and any further comments on the EU referendum will also be significant. A more sanguine outlook over China and implications of the Brexit vote would remove a significant barrier to Fed tightening.
Remarks on overall financial conditions will also be important in the minutes given a significant easing over the past few weeks.
There are clear divisions within the FOMC between the hawkish and dovish elements, especially over inflation. These divisions are likely to have widened at the July meeting, especially as Kansas City Fed president George reverted to calling for interest rates to be increased at the meeting.
The relative strength of FOMC opinions will be extremely important, especially on inflation and inflation expectations.
Markets will also be looking to se whether there were any specific references to September’s meeting. In the April minutes, there was a comment that most members expected to vote for a rate increase at the June meeting if the data met expectations. In the event, the data did not meet expectations and the June rate hike was abandoned.
The Fed will no doubt be wary of repeating the same rhetoric this time around, but any comment that rates were likely to be increased in September would be a very important market factor and trigger another shift in expectations.
It will also be important if the minutes also contain warnings that market expectations surrounding interest rate expectations are too complacent.
2. UK Inflation Data
The latest UK inflation data will be released on Tuesday August 16th at 04.30 EST.
The latest consumer and producer prices data will be released on Tuesday and will be the first data to show the inflation impact of June’s EU referendum vote to leave the EU.
The impact of Sterling weakness and potential change to corporate pricing behaviour will feed through over several months and the immediate impact will be limited, but the first data will give some indications of the likely magnitude of future increases.
One important element will be the extent, to which a probable surge in input prices translates into higher output prices.
If inflationary pressures remain subdued, the Bank of England will find it easier to justify further monetary easing, while any evidence that inflation is likely to rise more sharply would tend to limit the scope for further rate cuts as the negative trade-offs intensify.
There are also important data release throughout the week. The latest employment data will be released on July with a particular focus on the clamant count given that this data will relate to July, while the unemployment and earnings data will relate to June.
The July retail sales report is due for release on Thursday with the government borrowing data on Friday.
3. US Consumer Prices
The latest US consumer prices (CPI) release will be on Tuesday August 16th at 08.30 EST.
The consumer inflation data will have an important impact on Fed expectations with the core data especially important given that the rate has crept higher over the past few months.
There are certainly elements within the Federal Reserve Open Market Committee (FOMC), which are prepared to let the economy run above capacity and tolerate a slight overshoot in inflation in order to push the employment rate higher. This will still be a contentious area within the committee and will become even more controversial as the labour market continues to tighten.
A stronger than expected CPI release would make it more difficult for the Fed to maintain a very dovish stance, while there will be greater room for manoeuvre if there is a weak release. Core prices rose 0.1% in the August 2015 release, increasing the probability that the core annual rate will increase this month.
4. Fed’s Dudley Speech
New York Federal Reserve President Dudley is due to speak on Thursday August 18th at 10.00 EST.
Comments from Fed speakers will be watched very closely in the short term for hints on future Fed policy action. This is particularly important as the FOMC will be looking to raise market expectations of a September hike if there are seriously considering a rate increase at this meeting.
The most important signal is likely to come from Chair Yellen, who is due to speak at the Jackson Hole Symposium the following the week, but Dudley’s comments could still be important.
In late July, he made generally dovish comments, while stating that it was premature to rule out an increase in rates this year.
It will be important to see if he maintains a similar tone or turns slightly more hawkish following the latest jobs data. Dudley usually sits firmly in the dovish camp and any shift in stance would be an important signal.
There are also several other Fed speakers due over the week and a coherent shift to a more bullish rhetoric would certainly be an important signal surrounding September’s meeting. Atlanta Fed President Lockhart is due to speak on Tuesday, St Louis head Bullard on Wednesday, who is a voting member this year, with San Francisco Head Williams due to speak on Thursday.
5. Japan GDP Data
The latest Japanese GDP data will be released on Monday August 15th local time (19.50 EST Sunday).
The preliminary Japanese GDP data is vulnerable to substantial revision, but will still have a significant impact on overall expectations surrounding the outlook and Bank of Japan policy.
There was a 0.5% GDP increase for the previous quarter and markets are expecting an increase of around 0.2% for the quarter.
A weaker than expected release and very weak reading for the GDP price deflator would increase pressure for the Bank of Japan to relax monetary policy further.
In contrast, a stronger than expected release would lessen pressure for further short-term action to boost policy and would also tend to lessen political pressure for government action to support the economy.
Top 5 Economic Calendar Events for August 22-26
1. Fed Chair Yellen speech
US Federal Reserve Chair Janet Yellen is due to speak at the Jackson Hole Economic Symposium on Friday August 26th at 10.00 EST.
The Kansas City Fed is notoriously reluctant to publish the exact event agenda until almost immediately before the symposium starts so there is no detailed schedule at this time, but the Federal Reserve website has the speech listed at 10.00 EST.
Markets are very anxious to see the latest comments from Yellen as US interest rate speculation continues to have an important overall impact.
Federal Reserve minutes from July’s meeting showed clear divisions over the near-term outlook with a majority of voting members preferring to wait for more economic data before committing to a rate increase.
This week, New York Fed President Dudley was generally more optimistic surrounding the outlook and indicated that September rate increase was possible. San Francisco President Williams also called for a rate increase sooner rather than later as a preventative measure.
The key question is whether the latest employment report, released after the July FOMC meeting, has convinced a majority of the committee that the time is now right to increase rates or whether the more hawkish rhetoric is just being used to prevent a further erosion of rate-increase expectations.
The comments from Yellen will be very important in assessing the overall mood within the Fed. It is possible she could explicitly warn over a rate hike in September, although she will inevitably be wary of being caught out by much weaker than expected data in early September given that the Fed had to backtrack on a planned June rate increase. In this context, a strong hint over a September move would be a powerful signal.
2. US GDP (Q2 second estimate)
The revised US second-quarter GDP data will be released on Friday August 26th at 08.30 EST.
The first estimate of second-quarter GDP was much weaker than expected at 1.2% compared with Wall Street expectations of around 2.6% as investment and inventories fell sharply while consumer spending was notably strong.
Although Fed officials have tended to downplay the data’s importance, the weak release had an important impact in undermining expectations that the Federal Reserve would be in a position to increase interest rates in the short term.
The revised data will also have an important impact in shifting market sentiment even if the actual impact on Fed thinking is limited. Any significant upward revision would trigger a re-assessment of the potential for higher interest rates while any downward revision would reinforce the current mindset that a rate increase is unlikely.
3. US Durable Goods Orders
The latest US durable goods orders release will be on Thursday August 25th at 08.30 EST.
Investment levels within the US economy have remained generally disappointing over the past year at least and the Federal Reserve remains uneasy over the overall pace of capital spending. In the last two FOMC statements, there have been comments that fixed investment has been soft and capital spending fell in the second-quarter GDP data.
Looking at consensus expectations, it is significant to note that only one of the durable goods orders readings excluding transport has beaten market expectations over the past year. Another miss would reinforce concerns surrounding the outlook, although it is very doubtful whether the level of interest rates is deterring investment.
An improvement in durable goods orders would be important in bolstering confidence surrounding the overall economy and would also make it more likely that the Fed would be willing to tighten policy.
The data is prone to high volatility, especially in the aircraft sector and markets are expecting overall goods orders to be pulled higher by a recovery in aircraft orders following the significant decline last month.
Underlying data and the figure for non-defence capital spending will be especially important for the market reaction and potential impact on sentiment.
4. Japan Inflation Data
The latest Japanese and Tokyo CPI readings are due for release on Friday August 26th local time (19.30 EST Thursday).
The Bank of Japan’s core measure of inflation will also be released later in the day.
Japan’s inflation data usually has only a limited market impact, but the latest data will be watched closely as it is the final data ahead of the Bank of Japan policy review due before September’s policy meeting. The central bank has been unable to meet the 2% inflation target with the latest core reading at 0.8% while the Tokyo core inflation figure was at -0.4% for July.
Weaker than expected data would increase pressure for the central bank to adopt a more radical shake-up of policy and more decisive monetary easing at September’s review. Stronger than expected data would provide some short-term breathing space for the bank and lessen immediate pressure for action.
5. UK CBI Industrial Trends Survey
The latest CBI industrial trends survey will be released on Tuesday August 23rd at 06.00 EST.
Both markets and the Bank of England are still trying to gauge the impact of June’s referendum leave vote on the economy.
Survey evidence has been generally weak while actual data on consumer spending has held firm with a beat on July’s retail sales, although this could have been weather related.
The CBI industrial survey will be important in assessing developments since the referendum, in particular whether conditions appear to have stabilised, improved or deteriorated since the initial shock.
The survey will provide data or output, orders and prices as well as trends in exports. There should also be data on prices and inventories. A deterioration in confidence would reinforce expectations that the Bank of England will ease monetary policy further.
The latest CBI retail sales data will be published on Thursday August 25th at 06.00 EST and will also be watched closely for evidence on consumer spending trends during August and the September outlook.
Top 5 Economic Calendar Events for Aug 29-Sep 2
1. US Non-farm Payrolls Report
The US employment report for August will be released on Friday September 2nd at 08.30 EST.
Last month’s headline increase in non-farm payrolls employment report was again stronger than expected at 255,000 following a revised 292,000 gain for the previous month.
The very weak May data and June strength tended to cancel each other out, and the July strength was potentially more important. This month’s data will certainly be very important for expectations surrounding Federal Reserve policy. The July Federal Reserve Open Market Committee (FOMC) minutes indicated that some members already considered labour-market trends strong enough to justify an early move to raise rates. The majority of members wanted to see more data and they have already had strong data for July. Comments from chair Yellen on Friday and other members clearly indicate that the Fed has moved closer to a hike and may already be committed to making the move unless the data is extremely weak.
If the July data was not enough to convince the majority and there are still doubts, another strong report for August would clinch the argument.
A solid tone for the employment report would therefore increase market confidence that a rate increase at the September meeting is a realistic possibility and force a shift in futures markets.
A weak report would increase uncertainty once again and trigger fresh concerns surrounding prospects with short-term Fed tightening again seen as off the agenda.
The unemployment and participation rates will be watched closely within the data given the proximity to full employment.
The average earnings data will also be very important for expectations surrounding inflation and will continue to be a key metric for the Federal Reserve. Indeed, the average earnings data will probably be the most important element in the report, especially given recent references to wages by Fed speakers. The Fed will be looking for higher earnings as a key indicator of tightness in the labour market and a signal that overall inflationary pressure is liable to creep higher. A strong earnings figure would substantially boost the case for a September tightening.
The ADP employment report will be released on Wednesday August 31st at 08.15 EST and will also have an important impact.
2. UK PMI Manufacturing
The UK PMI manufacturing-sector data will be released on Thursday September 1st at 04.30 EST. The UK PMI reports will be very important for underlying expectations surrounding the economy and monetary policy.
Last month, as a one-off measure, Markit released a flash reading and a final reading, but there has been no flash reading this month with a reversion to the one reading.
The data will be important in guiding the Bank of England monetary response, especially as the central bank cited the PMI data as a key justification for relaxing monetary policy in August with the manufacturing index at the lowest level for over three years.
The impact will fade slightly given that hard data is now appearing, but the release will still be very important. Evidence of exports and pricing will also be watched closely within the data.
In this context, a further deterioration in the index would increase fears over the near-term outlook while any significant improvement would increase confidence that there will be a rebound in activity and lessen pressure for aggressive monetary easing.
The bank is assuming some improvement in the data over the next few month, but a strong improvement would increase speculation that further easing will be off the agenda.
The construction PMI data will be released on September 2nd with the services-sector data on the following Monday.
3. China PMI Data
China’s official and Caixin PMI data will be released on Thursday September 1st, with the official data at 21.00 EST on Wednesday.
Although market and media attention on the Chinese economy has continued to fade over the past few weeks, underlying trends will continue to be an extremely important underlying focus. Any signs of a fresh downturn in the Chinese economy would reinforce concerns surrounding the global growth outlook.
There was a sharp slowdown in the rate of credit expansion for July and there is clear evidence of policy splits within the authorities. The official line is for action to de-leverage the economy and accelerate structural reform, but there is a high degree of resistance.
Deterioration in the PMI releases would increase fears that the positive impact of PBOC monetary stimulus seen earlier in 2016 is fading, increasing pressure for more aggressive fiscal stimulus.
Any improvement in the PMI data would help offer some degree of relief and increase confidence that previous measures and fiscal support measures are having had a positive impact.
4. Euro-zone CPI Data
The latest Euro-zone flash CPI readings are due for release on Wednesday August 31st at 05.00 EST.
The ECB is continuing its battle to raise inflation towards the target of below, but approaching 2%.
The latest inflation data will be important in assessing progress towards that target and the chances that the central bank will be forced to sanction further monetary easing before the end of 2016.
Energy prices have increased over the month which should tend to put
some upward pressure on headline inflation. Markets will also be looking
at the core rate to assess underlying inflation trends. Although the
ECB does not officially target the core rate, this data may actually be
more important in the short term, especially given uncertainty over
inflation expectations.
Any decline in the inflation rate would increase pressure for further
monetary action while a stronger rate would raise speculation that the
ECB could be looking to taper bond purchases from early in 2017.
5. US Core PCE Price Index
The latest US PCE price index data will be released on Monday August 29th at 08.30 EST.
The Federal Reserve is focussing on both parts of its mandate with inflation trends just as important as the labour market. Wage growth has been a key focus for the Fed over the past few months given its signalling power as an indicator of labour-market tightness and as an overall indicator of potential inflationary pressures.
The core PCE inflation measure is the most important inflation indicator for the central bank. The underlying rate has been very well behaved over the past few months and stands at 1.6%. In comments last weekend, Fed vice-chair Fischer stated that inflation was within hailing distance of the target while doves on the FOMC remain unconvinced and concerned that overall inflationary pressure remains very weak.
This month’s data will be important as any increase in the annual rate would certainly strengthen Fed expectations that inflation will move towards the 2% target. In contrast, doubts would inevitably increase if there is a weaker than expected release.
Monday, August 29
Markets in the U.K. are to remain closed for a national holiday.
The U.S. is to release data on personal income and expenditure.
Tuesday, August 30
Japan is to release data on household spending.
Australia is to report on building approvals.
In the euro zone, Germany and Spain are to produce preliminary figures on consumer prices.
The U.K. is to report on net lending.
Canada is to release numbers on the current account and raw material price inflation.
The U.S. is to publish private sector data on consumer confidence.
Wednesday, August 31
New Zealand is to release data on business confidence.
Germany is to release reports on retail sales and the change in the number of people unemployed.
The euro zone is to publish a preliminary report on consumer prices.
Canada is to release monthly data on gross domestic product.
The U.S. is to release the ADP nonfarm payrolls report, as well as data on pending home sales and survey data on business activity in the Chicago region.
Thursday, September 1
China is to release official data on manufacturing and service sector activity as well as the Caixin manufacturing index.
Australia is to report on private capital expenditure and retail sales.
The U.K. is to release survey data on manufacturing activity.
The U.S. is to release the weekly report on initial jobless claims and the Institute of Supply Management is to report on manufacturing activity.
Friday, September 2
The U.K. is to release survey data on construction activity.
Canada is to release data on the trade balance.
The U.S. is to round up the week with the closely watched report on nonfarm payrolls and data on the trade balance.
The top 5 events releases for the week
The week ends with US employment. That is the top release
- US employment. Friday 8:30 AM ET. With the Fed ready to go but need to see data, the US employment report will be eyed. The expectations are for 180K in NFP and the unemployment rate falling to 4.8% from 4.9%
- US PMI Manufacturing. Thursday at 4:30 AM ET/0830 GMT. The UK PMI data will be for August with the expectations for a rebound to 49.0 from 48.2. This data is post Brexit. The July reading was the lowest on record (going back to 2013 though). PS. Construction PMI will be released on Friday with the expectations at 46.5 vs 45.9
- German CPI preliminary. The CPI for August is expected to rise by 0.1% for the month. If you look back to August 2015, the data showed 0.0%. In September it was -0.2. In October it was 0.0%. If the monthly inflation numbers can beat those numbers going forward, there will be more of an upward trajectory in CPI YoY (which stands at 0.4% and is expected to move up to 0.5% this month).
- China Manufacturing PMI. Wednesday in the US at 9 PM ET/ THursday 0100 GMT. China manufacturing is expected to fall slightly to 49.8 from 49.9 last month. The data had moved to >50 in March but dipped back below in July.
- Australia
retail sales. US Wednesday at 9:30 PM ET/ Thursday 0130 GMT. The
Australian retail sales have been positive each month this year. That is
the good news, the bad news is the spikes have been lower than in 2015
(See chart below). IN July, the gain is expected to come in at +0.3%
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
What to look out for in your trading next week.