On the Macro
It’s a big week ahead on the economic calendar. While the Fed and the ECB are now in a holding pattern until September, economic indicators will influence sentiment toward central bank monetary policy.
For the Dollar:
ISM Manufacturing PMIs for July will be in focus on Tuesday. The markets will look for a less marked contraction to support the bullish sentiment toward the US economy. Investors should consider sub-components, including employment and prices.
Labor market numbers also need consideration, with JOLTs Job Openings and ADP nonfarm employment change numbers out on Tuesday and Wednesday. After economic indicators from last week, tight labor market conditions would support a hawkish Fed outlook.
However, on Thursday, ISM Non-Manufacturing PMI numbers and jobless claims would need to support the Fed hawks.
The all-important US Jobs Report will wrap up a busy week on Friday. Wage growth, nonfarm payrolls, and the US unemployment rate will be focal points.
For the EUR:
It’s a busy start to the week for the EUR, with German retail sales, Eurozone inflation, and euro area GDP numbers kickstarting the week. We expect the Eurozone numbers to have more influence. With the ECB uncommitted to a September policy decision, sticky inflation and better-than-expected GDP numbers would support further interest rate hikes.
German employment numbers will also need consideration on Tuesday ahead of German trade and factory orders on Thursday and Friday.
Other stats include manufacturing and service PMI numbers for Italy and Spain and finalized numbers for France, Germany, and the Eurozone. The numbers from Italy and for the Eurozone will likely have the most impact.
For the Pound:
It is a big week for the Pound, with the Bank of England delivering its interest rate decision on Thursday. The markets are betting on a 25-basis point rate hike and forward guidance for one more hike before the year.
However, economic data is on the light side, with finalized July private sector PMI numbers out on Tuesday and Thursday. We expect revisions to the services PMI (Thurs) to have more impact.
With the economic calendar on the light side, investors should track BoE chatter throughout the week. BoE Governor Andrew Bailey (Thurs) and Chief Economist Huw Pill (Fri) are on the calendar to speak.
For the Loonie:
It is a quiet week. However, employment numbers will need consideration on Friday. A solid increase in employment would deliver Loonie support.
Other stats include Ivey PMI numbers for July that should have a limited impact on the Loonie. Market risk sentiment will influence. Private sector PMI numbers from China will need consideration.
Out of Asia
For the Aussie Dollar:
It is a big week ahead for the Aussie Dollar. The RBA interest rate decision will be the event of the week. Recent economic indicators sent mixed signals. While employment numbers supported a more hawkish outlook, softer inflation numbers eased bets on further monetary policy tightening. The uncertainty will leave the Aussie dollar exposed to a hawkish pause.
On Thursday, trade data will also move the dial ahead of the RBA meeting minutes on Friday.
For the Kiwi Dollar:
It’s a relatively quiet week for the Kiwi Dollar. Business confidence numbers will draw interest on Monday ahead of Q2 employment figures on Wednesday. We expect the employment figures to have more impact.
However, private sector PMI numbers from China will also need consideration.
For the Japanese Yen:
It is a quieter week for the Japanese Yen. Industrial production (Mon) and retail sales (Mon) will give investors a litmus test of the macroeconomic environment. Finalized private sector PMIs will also need consideration. Revisions to the services PMI will likely have more impact.
Out of China
It is a busier week ahead. NBS Private sector PMIs will be in focus on Monday. However, the all-important Caixin manufacturing and services PMIs will have more impact on market risk sentiment on Tuesday and Thursday.
Beyond the economic calendar, stimulus chatter will also move the dial.
