Currency markets finished the second quarter of this year in a mixed manner and with the U.S. Dollar gaining strength. Concerns related to trade relations between America and China made the headlines during the quarter. However, there was some kind of relief when Trump preferred to make use of the institution, CIFUS, for tackling Chinese investment instead of implementing an emergency law. This enabled the markets to experience some amount of stability and prevented a “risk on” atmosphere from taking a grip over the markets.
Last week, the U.S. data was mixed as the Fed’s favorite CPI data and the Core PCE beat estimates but the third estimate for the first quarter GDP missed analysts’ expectation. The durable goods orders data also came in mixed with upward revisions but the core figure missed analysts’ forecasts.
The EU Summit came to an end with an agreement on migration and this boosted to the Euro. This also helped defuse the political crisis that Merkel was faced within Germany. The pound gained strength because of an upgrade to the first quarter GDP but Brexit concerns continue to remain even after the EU Summit. Meanwhile, the Canadian Dollar staged a recovery amid a hike in oil prices and as GDP data beat estimates.
The first week of the September quarter is packed with releases such as the Nonfarm Payrolls and the FOMC Minutes, among others, despite the US Independence Day holiday on Wednesday. Here is an outlook on some of the key releases for the upcoming week:
#1: U.K. Manufacturing PMI (07/02/2018 Monday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Manufacturing PMI climbed to the 54.4 level in May from the 17-month low level of 53.9 for the prior month. The reading for the month came in well above analysts’ expectation that it will hit the 53.5 mark. Manufacturing output growth was driven mainly by the increase in finished goods stocks in the 26-year history of the survey and a sharp decline in work backlogs. However, the increase in the incoming new business was the least in nearly a year and the job creation paced eased to a fifteen-month low. As regards the prices, input cost inflation gathered momentum for the first time ever since January. On the other hand, the pace of the selling price inflation eased to the weakest level since last August. However, the manufacturers in the U.K. maintained a positive outlook for the manufacturing sector in May. Forecast for June 2018: 54.1
#2: U.S. ISM Manufacturing PMI (07/02/2018 Monday 14:00 GMT)
In the U.S., manufacturing activity grew at a faster rate than the forecast in May, according to the report released by Institute of Supply Management. The ISM Manufacturing PMI jumped to the 58.7 level last month from its 57.3 level in the month of April. Analysts’ had expected the manufacturing index to hit the 58.4 level last month. Further, May marked the 21st consecutive month of growth as far as the manufacturing sector was concerned. Most of the major subcomponents gained on a month-on-month basis. After declining for many months, production, new orders, the backlog of orders, and employment subcomponents registered significant increases. Forecast for June 2018: 58.2
#3: Australia RBA Rate Statement (07/03/2018 Tuesday 04:30 GMT)
The Reserve Bank of Australia releases the Rate Statement on the first Tuesday of every the month, except January. The RBA uses it as a tool to communicate with the investors as regards the monetary policy. It provides the outcome of the members’ decision on interest rates and a commentary on the economic conditions that impacted their decision. More importantly, the statement discusses the country’s economic outlook and offers several clues on the outcome of decisions in the future.
#4: Australia RBA Cash Rate (07/03/2018 Tuesday 04:30 GMT)
In the meeting held in the month of June, the Reserve Bank of Australia decided to leave the cash rate steady at the record low level of 1.50 percent. This was widely expected by the market. Policymakers noted that the country’s economy is expected to grow a little more than 3.0 percent in both 2018 and 2019, driven by encouraging business conditions and increasing non-mining investment. However, they expect the inflation rate to remain at a low level for some more time. Forecast for July 2018: .50 percent
#5: U.K. Construction PMI (07/03/2018 Tuesday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI remained unchanged at the 52.5 level in the month of May from the reading for the previous month. However, the figure for the month came in above analysts’ expectation of the 52.0 level. The latest Index reading indicated a moderate growth in the total activity with the commercial activity growth accelerating to a three-month high and both the civil engineering and residential activity expanding at a softer pace. New orders declined slightly in the month of May amid economic and political uncertainty, subdued activity in the retail sector, and delicate business confidence. Additionally, the optimism related to future growth expectation eased to a seven-month low level and job additions rose the least in as many as four months. As far as the price is concerned, input cost inflation hit the highest level since February. Construction PMI forecast for June 2018: 52.6
#6: Australia Retail Sales (07/04/2018 Wednesday 01:30 GMT)
In Australia, retail trade increased by 0.4 percent on a month-on-month basis in April compared to the flat reading reported for the prior month. The reading for the month came in well above analysts’ expectation for a 0.2 percent gain. Retail trade was driven by improved sales at cafes, takeaways, and restaurants. Sales rebounded at other retailing and household goods outlets. Food retailing continued its upward trend. However, sales declined for clothing, footwear and personal accessories, and department stores. Retail sales forecast for May 2018: an increase of 0.3 percent
#7: Australia Trade Balance (07/04/2018 Wednesday 01:30 GMT)
In Australia, trade surplus declined by 44 percent to A$0.98 billion in the month of April after the surplus for the prior month was revised upward to A$1.73 billion. The trade surplus figure for the month matched with analysts’ expectation. This is by far the smallest trade surplus figure ever since the deficit reported in December last year. The narrowing of trade surplus for April was attributed to the decline in exports. In the month of April, the outbound shipments dropped by 2.0 percent on a month-on-month basis to A$34.19 billion, whereas imports remained unchanged at A$33.21 billion. For the first four months of this year, the trade surplus was A$5.25 billion, down sharply from the surplus of A$6.84 billion for the same period last year. Trade surplus forecast for May 2018: A$1.21 billion
#8: U.K. Services PMI (07/04/2018 Wednesday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Services PMI rose to a three-month high level of 54.0 in the month of May from the April’s 52.8 level. The reading for the month came in way above analysts’ expectation that the index will touch the 53.0 level. While the business activity increased the most ever since February after the snow disruption in the March quarter, new business volumes rose at a relatively slow pace and employment growth came in at the second-weakest level ever since March last year. Further, uncertainty caused by Brexit continued to diminish business confidence. As far as the price was concerned, average cost burdens increased strongly amid greater fuel bills and rising salary payments. The pace of change in inflation eased for the second consecutive month to its weakest level ever since June last year. Services PMI forecast for June 2018: 53.9
#9: U.K. BoE Governor Mark Carney Speaks (07/05/2018 Thursday 10:00 GMT)
Mark Carney, Governor of the Bank of England, is scheduled to speak in Newcastle. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rate in the future.
#10: U.S. ADP Non-Farm Employment Change (07/05/2018 Thursday 12:15 GMT)
In the U.S., the private businesses hired 178,000 employees in the month of May after the job additions for the prior month was revised downward to 163,000. However, the reading for the month came in below analysts’ expectation that 190,000 workers will be hired. While the service-providing sector hired 114,000 workers, the goods-producing sector added 64,000 jobs. Midsized companies hired the most workers, followed by large and small businesses. Forecast for June 2018: 190,000 job additions
#11: U.S. ISM Non-Manufacturing PMI (07/05/2018 Thursday 14:00 GMT)
In the U.S., the ISM Non-Manufacturing PMI rose to 58.6 in the month of May from 56.8 in the prior month. The reading for the month came in well above analysts’ expectation that the index will touch the 57.5 level. Business activity, employment, and new orders grew at the fastest rate. Further, the firms remained optimistic as regards the business conditions and the overall economy though there continue to be concerns related to the uncertainty about tariffs, trade agreements, and the cost impact of goods sold. Forecast for June 2018: 58.3
#12: U.S. Crude Oil Inventories (07/05/2018 Thursday 15:00 GMT)
In the U.S., the crude oil stocks fell by 9.891 million barrels during the week that ended on June 22 after the 5.914 million barrels decline reported in the prior period. Analysts had expected the stocks to drop by 2.572 million barrels. This is the largest decline in crude oil inventories ever since September 2016. In the meanwhile, gasoline stocks rose by 1.156 million barrels, following the 3.277 million barrels increase in the prior week. Analysts had expected gasoline stocks to increase by 1.313 million barrels.
#13: U.S. FOMC Meeting Minutes (07/05/2018 Thursday 18:00 GMT)
The U.S. Federal Open Market Committee releases the minutes of the FOMC members’ meeting eight times in a year three weeks after the announcement of the Federal Funds Rate. The minutes of the meeting provides a detailed account of the most recent meeting of the FOMC and an in-depth insight into the financial and economic conditions that impacted their vote as regards setting the interest rates.
#14: Canada Employment Change (07/06/2018 Friday 12:30 GMT)
In Canada, a total of 7,500 jobs were lost in May after the economy shed 1,100 jobs in April. Analysts had expected the country to add 17,500 jobs during the month. While full-time jobs dropped by 31,000, part-time jobs declined by 23,600. Employment for people aged 25 years to 54 years decreased, but that for people aged 55 years and above increased. It remained little changed for the youth in the age group 15 years to 24 years. There was no change in the number of people employed in both the public and private sectors and self-employed workers.
#15: Canada Trade Balance (07/06/2018 Friday 12:30 GMT)
Canada’s trade deficit narrowed to C$1.9 billion in the month of April after the deficit for the prior month was revised downward to C$3.9 billion. However, the reading came in well below analysts’ expectation for a deficit of C$3.4 billion. While exports rose by 1.6 percent, driven by higher metal and non-metal products, energy products, and consumer goods, imports dropped 2.5 percent after hitting a record high in prior month mainly because of lower consumer goods and motor vehicles and parts purchases.
#16: Canada Unemployment Rate (07/06/2018 Friday 12:30 GMT)
In Canada, the unemployment rate stood at the 5.8 percent level in May, the same rate as in the prior month. The reading for the month matched with analysts’ expectation. The jobless rate has remained at the lowest level ever since 1976 for the fourth month in a row.
#17: U.S. Average Hourly Earnings (07/06/2018 Friday 12:30 GMT)
In the U.S., the average hourly earnings of all private nonfarm employees increased by 0.3 percent to $26.92 in the month of May compared to the unrevised gain of 0.1 percent for April. The reading for the month also came in above analysts’ expectations for an increase of 0.2 percent in average hourly earnings. On a year-on-year basis, the average hourly earnings increased 2.7 percent. The average hourly earnings of private-sector nonsupervisory and production employees rose to $22.59 in the month of May.
#18: U.S. Non-Farm Employment Change (07/06/2018 Friday 12:30 GMT)
In the U.S., nonfarm payrolls rose by 223,000 in the month of May after the reading for the prior month was revised downward to 159,000 in April. This is the highest reading in as many as 3 months and it beat analysts’ expectation of 189,000 job additions. Employment rose in many industries such as retail, construction, and healthcare.
#19: U.S. Unemployment Rate (07/06/2018 Friday 12:30 GMT)
In the U.S., the unemployment rate dropped to the 3.8 percent level in May from the 3.9 percent level in the prior month. The reading for the month came in below analysts’ expectation of 3.9 percent. This is the lowest rate ever since April 2000 as the number of unemployed people decreased by 281,000 to 6.07 million and employment increased by 293,000 to 155.47 million.