Weekly Market Snapshot 31-4/8 | NFP Release, Unemployment in EU & AU, UK base rate decisions, CPIs and PMIs are the highlights from the key calendar events
The week ends with the infamous NFP jobs print. Which no longer provides the fireworks of previous years, given the relative stability of USA employment; many Fed officials consider unemployment at circa 5% to be relative “full employment”. However, the data release can still move markets, if a shock print is published. The ADP data published on Wednesday is often regarded as a foretelling of the NFP print.
Canada will also reveal various employment/unemployment stats, whilst Germany’s unemployment is forecast to remain unchanged, as is the Eurozone’s. Europe’s CPI is released, as is the GDP. The UK’s MPC will reveal its base interest rate decision.
Various PMIs and ISM readings are published during the week; the USA’s, China’s and Canada’s manufacturing readings stand out as the most prominent releases. Consumption figures for the USA will be revealed.
Australia’s interest rate decision will be monitored closely, as will be the employment/unemployment situation in New Zealand. Retail sales data for Australia will be published and the RBA will issue a monetary policy statement.
The week starts on Sunday evening with the June industrial production data from Japan. In May the reading came in at 6.5% growth, a figure above this is expected. Later Japan will also release data on vehicle production, currently growing at 5.5% YoY.
Sunday/Monday also sees a raft of data publications released by Australia and New Zealand, all regarded as low to medium impact news events. China’s manufacturing PMI represents the first high impact news event of the week, forecast to come in at 51.4 for July, falling from 51.7 in June. As (arguably) the manufacturing engine of global growth, this Chinese figure is always monitored carefully and at only 1.7 above the 50 metric that separates contraction from growth, a significant movement could affect opinions on global growth estimates.
Various credit metrics from the U.K. will be published, with concerns that consumer credit is reaching worrying levels, the latest monthly figure will be closely watched, to see if last month’s figure of £1.7b has been breached. The Eurozone unemployment rate will be revealed on Monday, forecast to remain unchanged at 9.3% for June. CPI for the single currency bloc is forecast to remain constant, at 1.3% YoY for July. From the USA the Chicago purchasing managers’ index is published, predicted to drop to 59 from 65.7, whilst USA pending home sales are forecast to rise by 1% month on month.
Tuesday’s main economic events begins with Australia’s interest rate decision, there is little expectation, amongst the economists’ polled, that the rate will be raised above its current 1.5% level. Attention then turns to Europe, Germany’s unemployment level is forecast to remain at 5.7%. Europe’s GDP is predicted to stay unchanged at 1.9%. From the USA we receive various data on consumption and expenditure is forecast to rise above its current 1.4% level. Various ISM data is published for the USA, manufacturing and employment are the key metrics, with manufacturing predicted to fall to 55.6, from 57.8. Late evening New Zealand prints their latest unemployment YoY data, expected to remain unchanged at 5.7%.
On Wednesday morning the BOJ official Mr. Funo will speak in Sapporo, a few hours later Japan’s consumer confidence reading will be released. Later in the morning we learn the latest U.K. construction PMI, predicted to remain close to the June reading of 54.8. The Eurozone’s producer price index is forecast to remain close to the previous 3.3% increase recorded in May. As attention then turns to the USA, we’ll receive the latest ADP data, expected in at 184k for July, this would represent a significant rise on the 158k private jobs created in June. With WTI oil rising in price over recent days, the D.O.E. inventory level will be carefully watched, for any signs of any change.
Thursday’s economic news begins with Japan’s services and composite PMIs, little change is expected, a similar situation is predicted for China’s identical PMIs. The Eurozone countries follow Asia with many PMIs, as does the UK, also for services and composite. The ECB will publish an economic bulletin and we’ll receive the latest data on Eurozone’s retail sales, expected to remain close to the last 2.6% YoY growth figure. Thereafter, focus turns to the UK’s BoE and the monetary policy committee’s interest rate decision. At an historic low of 0.25%, ushered in since the June 2016 referendum decision, there is little anticipation of a change, or for an adjustment to the current asset purchase target of £435b. The BoE will then move on to their inflation report, with CPI and RPI moderating marginally. As sterling has recently recovered versus the U.S. dollar, the initial Brexit induced inflation panic appears to have subsided.
As attention shifts to the New York open, the PMI reporting continues, the ISM services composite is published, with expectations for a fall, from 57.4 to 56.8. Factory orders for June are anticipated to improve to 1.1% growth, from a shock -0.8% fall in May.
Friday morning witnesses Australian retail sales data revealed, before the RBA statement on monetary policy takes place, coming after the interest rate decision has been revealed on Tuesday. Focus then turns to Germany; factory orders are expected to remain at circa 3.7% growth for June, whilst Germany’s construction PMI for July is forecast to deliver a similar figure to the 55.1 from June.
As attention shifts to North America, we receive the latest overall employment/unemployment data concerning Canada, investors will be looking for an overall improvement in the labour conditions and for the unemployment rate to fall from 6.5%. Then we move onto the main economic high impact event of the day; NFP, non farm payroll data. After a surprise elevation last month; to 222k, the forecast is for a retreat back to a figure of 175k for July. Average earnings are expected to remain unchanged, at 2.5% growth YoY.
Weekly Market Snapshot by FXCC Research & Analysis team
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