Last week was a positive one for the U.S. dollar amid top-tier events. The Fed decided to leave the rates unchanged as was widely expected. In addition, the Fed made a few minor tweaks to the rate statement. However, the developments in global trade tariffs front shook the markets. There were reports that the U.S. and China are exploring ways to restart trade talks after the U.S. announced that it was planning to slap a trade tariff of 25 percent on the $200 billion worth of goods exported to the U.S. by China. Tension mounts as the imposition of duties are scheduled to start towards the end of this month. Meanwhile, it is learned that China is preparing for implementing retaliatory tariffs. On the economic front, the Non-Farm Payrolls data came out exactly as economists expected but the job growth data missed analysts’ estimates in July.
The key releases scheduled for release during the upcoming week include the inflation data from the U.S., GDP data from the U.K., and others from elsewhere in the world. Here is an outlook on a few key data:
#1: Australia RBA Rate Statement (08/07/2018 Tuesday 04:30 GMT)
The Reserve Bank of Australia the Rate Statement on the first Tuesday of every month, excluding January. The RBA’s Board uses the Statement as a tool to communicate with investors as regards the monetary policy. It provides information on the outcome of the interest rate decision and a commentary on the economic conditions that impacted their decision. More importantly, it discusses the country’s economic outlook and provides clues to future decisions.
#2: Australia Cash Rate (08/07/2018 Tuesday 04:30 GMT)
The Reserve Bank of Australia changed the key interest rate for the last time in August 2016. The RBA is not expected to increase the rate in the meeting in August 2018 as well. The Australian economy is doing alright and the inflation is stable. RBA Governor Phillip Lowe is likely to maintain a neutral bias but any comments on trade might create some interest among traders.
#3: New Zealand Inflation Expectations (08/08/2018 Wednesday 03:00 GMT)
In New Zealand, the inflation expectations declined to 2.0 percent in the June quarter of this year from 2.10 percent in the previous quarter.
#4: Australia RBA Governor Philip Lowe Speaks (08/08/2018 Wednesday 03:05 GMT)
Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to deliver a talk on “Demographic Change and Recent Monetary Policy” at the luncheon of Anika Foundation in Sydney. Markets often turn volatile during his speeches. This is because traders make an attempt to understand interest rate clues.
#5: U.S. Crude Oil Stocks Change (08/08/2018 Wednesday 14:30 GMT)
In the U.S., the crude oil stocks rose by 3.803 million barrels during the week that ended on July 27 after stocks fell by 6.147 million barrels in the prior week. Analysts had expected a drop of 2.794 million barrels. On the other hand, gasoline declined by 2.536 million barrels against analysts’ expectation of 1.288 million barrels decline.
#6: New Zealand Official Cash Rate (08/08/2018 Wednesday 14:30 GMT)
New Zealand’s central bank decided to maintain its official cash rate at the record low level of 1.75 percent itself during the meeting in June as was widely expected by the market. The central bank changed the key interest rate for the last time in November 2016. Policymakers said that the economic outlook remains intact and inflation is expected to rise in the near term because of higher fuel prices. In New Zealand, the consumer prices rose by 1.1 percent on a year-on-year basis in the first quarter of this year, following the 1.6 percent rise in the prior quarter. The increase was in line with analysts’ expectations. This is the slowest rise inflation ever since the September quarter of 2016. Forecast for August 2018: 1.75 percent
#7: New Zealand RBNZ Monetary Policy Statement (08/08/2018 Wednesday 14:30 GMT)
Released on a quarterly basis, the Reserve Bank of New Zealand’s Monetary Policy Statement provides details on how the inflation targets will be achieved and how the monetary policy will be formulated and implemented during the next five years. It also provides information on how the monetary policy has been implemented after the release of the last statement.
#8: New Zealand RBNZ Rate Statement (08/08/2018 Wednesday 14:30 GMT)
The Reserve Bank of New Zealand releases the Rate Statement eight times in a year. It is the central bank’s primary tool to communicate with investors as regards the monetary policy. It provides the outcome of the policymaker’s decision on interest rates and a commentary on the economic conditions that impacted their decision. More importantly, it provides a projection of the economic outlook and clues to future decisions.
#9: New Zealand RBNZ Press Conference (08/08/2018 Wednesday 14:30 GMT)
The Governor of the Reserve Bank of New Zealand holds a press conference for about 30 minutes after the announcement of the official cash rate. The press conference has two parts: the reading of a prepared statement and questions by the press. Sometimes, the questions lead to unscripted answers. This causes heavy market volatility.
#10: U.S. PPI (08/09/2018 Thursday 12:30 GMT)
In the U.S., producer prices for final demand goods increased by 0.3 percent on a month-over-month basis in June, following the 0.5 percent gain reported in May. The reading for June beat analysts’ expectations for an increase of 0.2 percent. The services price rose 0.4 percent because of a 21.8 percent jump in lubricants and fuels retailing index. Meanwhile, the prices of goods edged up 0.1 percent because the increases in energy prices. The core PPI rose by 0.3 percent, beating analysts’ expectations for a 0.2 percent gain. Forecast for July 2018: an increase of 0.2 percent
#11: Australia RBA Monetary Policy Statement (08/10/2018 Friday 01:30 GMT)
The Reserve Bank of Australia releases the Monetary Policy Statement on a quarterly basis. If the Statement offers a more hawkish tone than expected, it is good for the Australian dollar.
#12: U.K. GDP (08/10/2018 Friday 08:30 GMT)
England’s economy expanded 0.3 percent in the month of May after remaining flat in March and recording a 0.2 percent growth in April. While the services, construction, and agricultural sectors grew 0.3 percent, 2.9 percent, and 0.2 percent, respectively, the production sector declined 0.4 percent. Forecast for June 2018: 0.2 percent growth
#13: U.K. Manufacturing Production (08/10/2018 Friday 08:30 GMT)
In the U.K., manufacturing production rose by 0.4 percent in the month of May, rebounding from the 1.3 percent decline reported in the prior month. Analysts had expected the manufacturing production to increase by 0.9 percent. Factory production increased for the first time since December driven by transport equipment and pharmaceutical products. Forecast for June 2018: an increase of 0.3 percent
#14: U.K. Preliminary GDP (08/10/2018 Friday 08:30 GMT)
The U.K.’s economy expanded 0.2 percent on a quarter-on-quarter basis in the first quarter of this year. This slightly higher compared to the second estimate of 0.1 percent and the 0.4 percent growth in the prior quarter. The net contribution of the trade sector to GDP was revised higher. On the production side, construction output declined less than the initial estimate. The economy is expected to grow 0.4 percent in the June quarter.
#15: Canada Employment Change/Unemployment Rate (08/10/2018 Friday 12:30 GMT)
The Canadian economy hired 31,800 workers in June after 7,500 workers lost their jobs in May. The reading for the month beat analysts’ expectations of 24,000 job additions. Part-time jobs and full-time jobs rose by 22,700 and 9,100 respectively. There was no change in the number of workers in the public and private sectors and in self-employment.
Meanwhile, the unemployment rate increased to 6.0 percent from 5.8 percent in the prior month. Analysts had expected the unemployment rate to come in at 5.8 percent. This is the highest jobless rate ever since October last year, mainly because of the 76,000 increase in labor force. This is the biggest monthly growth in six years.
#16: U.S. CPI/Core CPI (08/10/2018 Friday 12:30 GMT)
In the U.S., the consumer prices rose by 0.1 percent on a month-over-month basis in June after increasing 0.2 percent in the previous month. Analysts had expected the consumer prices to increase by 0.2 percent. Excluding energy and food prices, inflation grew 0.2 percent, the same rate as in May. The reading for the month matched with analysts’ expectations.
Inflation has been increasing, driven by energy prices. The core prices have also gone up and have hit an annual reading of 2.3 percent in June. Both the headline and core inflation figures are expected to rise by 0.2 percent in July.