The U.S. dollar traded mixed last week amid a strong GDP data and an inflow of trade headlines, among others. The better-than-expected GDP data released by the U.S. government did not create much price movement in the markets as President Trump leaked the information ahead of its announcement. However, the greenback made some gains on NAFTA decision but retreated on the back of disappointing trade relations between the European Union and the United States. The key releases scheduled for the upcoming week include the Fed decision on interest rates, the Non-Farm Payrolls, Japan and U.K. interest rate decisions. Here is an outlook on the economic data to be released next week:
#1: New Zealand ANZ Business Confidence (07/31/2018 Tuesday 01:00 GMT)
Business confidence in New Zealand fell to a seven-month low in the month of June because of weak retail trade as credit, costs, and capacity weighed on firms. A net 39.0 percent of the 341 firms that were contacted as part of the business outlook survey by ANZ expect that the general business conditions will worsen in the next 12 months. This is 12 points lower compared to the reading for the previous month. It is also the lowest reading ever since November last year.
#2: Japan BoJ Policy Rate Decision (07/31/2018 Tuesday 03:00 GMT)
In the meeting held in June, the Bank of Japan decided to leave the key short-term Policy rate at the -0.1 percent level itself as was widely expected by analysts. Policymakers also maintained the 10-year yield target for government bond at around zero percent. However, they lowered the inflation expectation to the 0.5 to 1.0 percent range for the fiscal year 2018. In April, the Bank of Japan had said that inflation was hovering around 1.0 percent.
The central bank is very far away from its goal of 2.0 percent core inflation rate but is gradually limiting its bond-buying activity, triggering the speculation that it will quietly stop the stimulus program. The upcoming policy meeting will throw light on future decisions. Analysts are not expecting any change in Policy rate in the meeting scheduled for this month.
#3: Japan BoJ Monetary Policy Statement (07/31/2018 Tuesday 03:00 GMT)
The Bank of Japan releases the Monetary Policy Statement eight times in a year. The central bank uses the statement as a tool to communicate with traders and investors as regards the monetary policy. It provides the outcome of the policymakers’ decision related to asset purchases. In addition, it proves a commentary on the economic situation in the country that impacted their decision. More importantly, it makes available an economic outlook projection and clues on future decisions.
#4: Japan BoJ Quarterly Outlook Report (07/31/2018 Tuesday 05:00 GMT)
The Bank of Japan’s quarterly outlook report that was released in April noted that the economy is expected to expand moderately as the momentum for achieving the price goal lacked steam. Inflation is expected to move towards the 2.0 percent mark as and when the output gap is improved and inflation expectations heighten. As far as the economic growth is concerned, it remains balanced for FY2018 but is skewed to the downside for FY2019. Core CPI is expected to be 1.3 percent in FY2018/19 (vs. 1.4 percent projected in January this year) and 1.8 percent in FY2019/20 (vs. 1.8 percent projected in January this year).
#5: Japan BoJ Press Conference (07/31/2018 Tuesday 06:30 GMT)
The Governor of the Bank of Japan will address a press conference after the announcement of the Policy rate to communicate to the traders and investors as regards the factors that impacted the most recent decision, the country’s overall economic outlook, inflation growth rate, and clues on the direction of future monetary policy decisions.
#6: Canada GDP (07/31/2018 Tuesday 12:30 GMT)
Canada’s GDP advanced 0.1 percent on a month-over-month basis in April, following the 0.3 percent growth in March. Analysts expected the GDP to remain flat in April. This was the slowest expansion ever since the 0.2 percent contraction reported in January. The goods-producing industries grew by 0.2 percent because of gains in the manufacturing and utility sectors, but the service-producing industries remained unchanged as the fall in retail trade was offset by an increase in a majority of the subsectors. Forecast for May 2018: a growth of 0.3 percent
#7: U.S. Conference Board Consumer Confidence (07/31/2018 Tuesday 14:00 GMT)
The Consumer Confidence Index reported by the Conference Board dropped in June, following the increase in May. In June, the Index stood at 126.4, down from the 128.8 level in the previous month. While the Present Situation Index remained relatively flat at 161.1 (161.2 in the prior month), the Expectations Index declined to 103.2 from 107.2 in the previous month. Forecast for July 2018: 126.5
#8: New Zealand Employment Change and Unemployment Rate (07/31/2018 Tuesday 22:45 GMT)
In New Zealand, employment rose by 0.60 percent on a quarter-on-quarter basis in the first quarter of this year. Meanwhile, the unemployment rate declined to 4.4 percent from 4.5 percent in the prior period. The reading for the quarter matched with analysts’ expectations. With the fall in the first quarter, the unemployment rate in New Zealand has fallen for the fifth consecutive quarter. This is the lowest rate ever since the final quarter of 2008. The number of unemployed people dropped by 3,000 to 119,000 and employment rose by 15,000 to 2.618 million. The labor force participation rate declined 0.1 percentage points to 70.8 percent.
Employment change and unemployment rate forecast for the second quarter: while the employment is expected to increase by 0.4 percent, the unemployment rate is anticipated to stay at 4.4 percent
#9: U.K. Manufacturing PMI (08/01/2018 Wednesday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Manufacturing PMI came in at 54.4 for the month of June. The index was almost at the same level (54.3) for the previous month. However, it came in higher than analysts’ expectation of 54.0. While the new business growth rose to a three-month high because of increases in export to mainland Europe, South America, Australia, and China, employment increased the most ever since March. Output growth, however, eased from the levels in the previous month and business optimism hit a seven-month low because of concerns expressed by firms as regards increases in input prices, trade tariffs, exchange rate, and Brexit. Input cost inflation rose to a four-month high. The Manufacturing PMI for the second quarter was 54.2, the weakest reading ever since the last quarter of 2016. Forecast for July 2018: 54.2
#10: U.S. ADP Non-Farm Employment Change (08/01/2018 Wednesday 12:15 GMT)
In the U.S. the private businesses added 177,000 jobs in June after the reading for the prior month was revised upward to 189,000. The reading for the month came in below analysts’ expectation for the addition of 190,000 jobs. While the service-providing sector hired 148,000 workers, the goods-producing sector hired 29,000 workers. Midsized companies hired the 80,000 workers, while small and large companies hired 29,000 and 69,000 workers, respectively. Forecast for July 2018: an addition of 186,000 jobs
#11: U.S. ISM Manufacturing PMI (08/01/2018 Wednesday 14:00 GMT)
In the U.S., the Manufacturing PMI reported by the Institute for Supply Management rose to 60.2 in the month of June from the 58.7 level in the prior month. The reading for the month beat analysts’ expectation of 58.4. The figure for the month represented the manufacturing strongest expansion in four months. Production and inventories grew faster, but employment and new orders eased a little bit. Forecast for July 2018: 59.4
#12: U.S. Crude Oil Stocks Change (08/01/2018 Wednesday 14:30 GMT)
In the U.S., the crude oil stocks dropped 6.147 million barrels during the week that ended July 20 after the 5.836 million barrels increase in the prior week. The decline in crude stocks was higher than analysts’ expectations for a drop of 2.331 million barrels. Gasoline stocks also declined 2.328 million barrels against analysts’ expectation for a decline of 0.713 million barrels.
#13: U.S. FOMC Statement (08/01/2018 Wednesday 18:00 GMT)
The U.S. FOMC generally changes the statement a little bit at each release. Traders always focus on these changes. The FOMC uses the Statement as a tool to communicate to the investors as regards the monetary policy. It provides the outcome of the most recent meeting for setting interest rates and other policy measures. It also contains a commentary on the economic conditions that impacted the members’ votes. More importantly, it provides an economic outlook and clues for future votes.
#14: U.S. Federal Funds Rate (08/01/2018 Wednesday 18:00 GMT)
In the U.S., the Federal Reserve hiked the federal funds rate by a 0.25 percent to the range of 1.75 percent to 2.0 percent during the meeting in June. Policymakers said that the strengthening of the labor market and economic activity were happening at a solid pace and projected two more increases towards the end of the year. Only one hike was projected earlier on.
The Fed Chair Jerome Powell is upbeat on the American economy but warned that tariffs on trades are not good. However, President Donald Trump criticized the Fed for hiking interest rates when he was trying to stimulate the economy further. In the FOMC meeting in August, no change in interest rates is expected.
#15: Australia Trade Balance (08/02/2018 Thursday 01:30 GMT)
Australia’s trade surplus increased by 75.0 percent to A$0.83 billion in the month of May after the surplus for the previous month was revised downward to A$0.47 billion. However, the reading for the month came in below analysts’ expectations for a surplus of A$1.2 billion. Exports and imports both hit record highs. Forecast for June 2018: A$0.91 billion
#16: U.K. Construction PMI (08/02/2018 Thursday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI increased to 53.1 in the month of June from the final level of 52.5 in the previous month. Analysts had expected the index to hit the 52.4 level. The reading for June represented the strongest rate of expansion ever since November last year. Residential and commercial building work grew strongly, but civil engineering activity grew at a slower pace. Meanwhile, the new orders grew at the fastest pace ever since May 2017 and job creation rose at the strongest pace in a year. Additionally, the input buying was at the highest level ever since December 2015. Business optimism bounced back from the seven-month low reported in May. Input cost inflation touched a nine-month high because of higher metals prices (especially steel) and higher transportation costs. Forecast for July 2018: 52.9
#17: U.K. BoE Inflation Report (08/02/2018 Thursday 11:00 GMT)
Released on a quarterly basis, the Inflation Report provides the Bank of England’s projection for economic growth and inflation over the next two years. Marke Carney, Governor of the Bank of England holds a press conference for discussing its contents after the release.
#18: U.K. BoE MPC Official Bank Rate Votes (08/02/2018 Thursday 11:00 GMT)
In the monetary policy Committee meeting in June, the members voted 3-0-6 to maintain the Official Bank Rate at the current level of 0.5 percent. Further, the committee unanimously voted to maintain the purchase level of the stock of corporate and UK government bonds. It is expected that the members will vote 8-0-1 in favor of a 0.25 percent hike in Official Bank Rate.
#19: U.K. BoE Monetary Policy Summary (08/02/2018 Thursday 11:00 GMT)
Released on a monthly basis, the Monetary Policy Summary provides information on the outcome of members’ vote on setting interest rates and other policy matters. It also provides a commentary on the economic conditions that impacted their decision. More importantly, it discusses the country’s economic outlook and provides clues on future votes.
#20: U.K. BoE Official Bank Rate (08/02/2018 Thursday 11:00 GMT)
In its meeting in June, the Bank of England decided to leave the key Bank Rate at the current level of 0.5 percent as was expected by the analysts. Three out of nine policymakers, including the Chief Economist of the central bank, voted in favor of an interest rate hike compared to the two votes in the prior meeting. However, the Committee unanimously agreed to maintain the U.K. government bond purchases at £435 billion and reduce the purchase of assets till the rate touched the 1.5 percent mark instead of the 2.0 percent level announced earlier.
The Bank of England had hinted that it would hike interest rates in the meeting in August. An increase to 0.75 percent would take the Official Bank Rate to its highest level ever since the financial crisis. However, inflation has remained at the 2.4 percent level, retail sales figure has been disappointing in June, and there are uncertainties associated with the Brexit. Under the circumstances, the BOE may surprise the market by not changing the interest rates.
#21: U.K. BOE Governor Mark Carney Speaks (08/02/2018 Thursday 11:30 GMT)
Mark Carney, Governor of the Bank of England, and the MPC members are scheduled to hold a press conference in London to discuss the Inflation Report. The market often turns volatile during his speeches. This is because traders make an attempt to understand the direction of interest rate in the future.
#22: Australia Retail Sales (08/03/2018 Friday 11:00 GMT)
In Australia, retail trade increased 0.4 percent on a month-on-month basis in May after the figure for the previous month was revised upward to an increase of 0.5 percent. The reading for the month came in above analysts’ expectation for a 0.3 percent gain. The increase in retail trade was driven by department stores and was followed by footwear, clothing, and personal accessories. Both the sectors rebounded after warm weather affected sales in April. Retail trade was also higher in the food and household goods sectors. Forecast for June 2018: an increase of 0.3 percent
#23: U.K. Services PMI (08/03/2018 Friday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Services PMI rose to the 55.1 level in June from the 54.0 level in May. The reading for the month came in above analysts’ expectation of 54.0. The reading for the month represented the strongest rate of growth since last October as new business grew at the fastest pace since May 2017. Backlogs of work rose the most ever since July 2015 and job creation rate remained close to the 13-month low in April. Forecast for June 2018: 54.7
#24: Canada Trade Balance (08/03/2018 Friday 12:30 GMT)
Canada’s trade deficit widened to C$2.77 billion in the month of May from the C$1.86 billion deficit in April. The trade deficit for the month came in above analysts’ expectation of C$2.05 billion. Imports increased 1.7 percent, driven by aircraft purchases, while exports declined 0.1 percent. Forecast for June 2018: a deficit of C$2.3 billion
#25: U.S. Average Hourly Earnings (08/03/2018 Friday 12:30 GMT)
In the U.S., all employees average hourly earnings on private nonfarm payrolls increased by 0.2 percent to $26.98 in June 2018 after registering a 0.3 percent gain in the prior month. Analysts had expected the average hourly earnings to increase by 0.3 percent. The average hourly earnings of production and nonsupervisory employees in the private-sector rose to $22.62 in June. Forecast for July 2018: an increase of 0.3 percent
#26: U.S. Non-Farm Employment Change (08/03/2018 Friday 12:30 GMT)
In the U.S., the non-farm employment rose by 213,000 in the month of June. The largest gains were in manufacturing and professional business services sectors. Motor vehicles and parts manufacturers added 12,000 jobs after losing 8,000 jobs in May. Healthcare and construction sectors also reported strong gains. Forecast for July 2018: 193,000 jobs are expected to be added
#27: U.S. Unemployment Rate (08/03/2018 Friday 12:30 GMT)
In the U.S., the unemployment rate increased to 4.0 percent in the month of June from the 3.8 percent level in the prior month. This is the lowest level ever since April 2000. The figure for the month came above analysts’ expectation of 3.8 percent. The number of unemployed people in the U.S. rose by 499,000 to 6.6 million. Forecast for July 2018: 3.9 percent
#28: U.S. ISM Non-manufacturing PMI (08/03/2018 Friday 14:00 GMT)
In the U.S., the Non-Manufacturing PMI reported by the Institute of Supply Management came in at 59.1 in June from 58.6 in the previous month. The reading for the month beat analysts’ estimate of 58.3. This is the highest level for the index ever since February. New orders and business activity rose faster and the pressure on prices eased. Companies remain optimistic about the business conditions in the U.S. and the robustness of the economy although there is some concern about tariffs, delivery, and capacity.