Last week the U.S. dollar suffered losses as the market mood improved over the final week of August. Markets cheered as the U.S. and Mexico reached a deal. Canada’s participation continues to in the air, but the risk-on feeling pulled the greenback down. The story will be a little different with China when the deal will be finalized during the upcoming week. Brexit negotiations continue, but there is no major breakthrough so far. Contingency plans for a Brexit without any deal are being worked out.
The major release during the upcoming week is Non-Farm Payrolls report from the U.S. Here is an outlook on some of the key releases scheduled for the upcoming week:
#1: Australia Retail Sales (09/03/2018 Monday 01:30 GMT)
In Australia, retail trade increased 0.4 percent on a month-on-month basis in June, at the same rate as in the previous month. However, the reading for the month beat analysts’ expectations for a gain of 0.3 percent. With this increase, retail trade in Australia has registered growth for six months consecutively. Sales in cafes, restaurants, and takeaway outlets rebounded. Further, sales continued to increase in food retailing, household goods, clothing, footwear, and personal accessory sectors continued to increase. Sales in other retailing sectors remained relatively unchanged. Sales in department stores declined. Forecast for July 2018: an increase of 0.3 percent is expected
#2: Japan BoJ Governor Haruhiko Kuroda Speaks (09/03/2018 Monday 05:40 GMT)
Haruhiko Kuroda, Governor of the Bank of Japan, is scheduled to speak in Tokyo at the symposium organized to commemorate the 30th anniversary of stock index futures trading. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.
#3: U.K. Manufacturing PMI (09/03/2018 Monday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Manufacturing PMI declined to the lowest level of 54.0 in as many as three months in the month of July after the reading for the prior month was revised downward to the 54.3 level. Analysts had expected the index to come in at the 54.2 level. Production growth declined to the lowest level in sixteen months and the increase in new orders was the lowest ever since June 2017 in spite of the pickup seen in new exports. Business optimism also dropped to the lowest level in 21 months amid uncertainty related to both the exchange rate and Brexit. However, employment increased for the 24th consecutive month because of planned expansions by businesses, efforts put in to reduce work backlog, and higher output. Input cost inflation continued to remain high and selling prices increased the most ever since February. Forecast for August 2018: 53.9
#4: Australia Cash Rate (09/04/2018 Tuesday 04:30 GMT)
In the meeting held in August, the Reserve Bank of Australia decided to leave the cash rate at the record low level of 1.5 percent. With this, the Australian central bank has maintained the interest rate at the 1.5 percent level for two years. This is by far the longest pause in interest rate in the modern history of the central bank. Inflation and wage growth continue to remain sluggish. Forecast for September: 1.5 percent no change expected
#5: Australia RBA Rate Statement (09/04/2018 Tuesday 04:30 GMT)
The Reserve Bank of Australia releases the Rate Statement on the first Tuesday of every month, excluding January. The RBA Board uses it as a tool to communicate with the investors as regards the monetary policy. It provides:
The outcome of members’ decision on interest rates
A commentary on the economic conditions that impacted the members’ decision
Economic outlook
Clues on future decisions
#6: Australia RBA Governor Philip Lowe Speaks (09/04/2018 Tuesday 09:30 GMT)
Philip Lowe, Governor of Reserve Bank of Australia, is scheduled speak in Perth at the RBA board dinner. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.
#7: U.K. Inflation Report Hearings (09/04/2018 Tuesday 12:15 GMT)
The Band of England Governor and many MPC members are scheduled to testify before the Treasury Committee of the Parliament on the economic outlook and inflation. The hearings last for a few hours and create market volatility as traders look for direct comments related to the currency markets.
#8: U.S. ISM Manufacturing PMI (09/04/2018 Tuesday 14:00 GMT)
In the U.S., the Manufacturing PMI reported by Institute for Supply Management fell to the 58.1 level in the month of July from 60.2 in the prior month. The reading for the month came in below analysts’ expectation of 59.5 and pointed to the weakest growth in the manufacturing sector in as many as three months as new orders, export orders, and production slowed down. Though the demand continues to remain robust, manufacturers expressed concerns as regards tariff-related issues, including reciprocal tariffs. Forecast for August: 57.6
#9: Australia GDP (09/05/2018 Wednesday 01:30 GMT)
The Australian economy expanded 1.0 percent in the first quarter of this year and beat analysts’ consensus for an increase of 0.9 percent. In the prior quarter, the GDP grew 0.5 percent (upwardly revised figure). This is the highest expansion ever since the second quarter of last year and as driven by a rebound in export activities. On a year-on-year basis, the economy expanded by 3.1 percent, following the 2.4 percent growth in the previous quarter. Analysts had expected a growth of 2.8 percent. This is also the fastest yearly growth rate ever since the second quarter of 2016. Forecast for the second quarter of 2018: Australian GDP is expected to expand by 0.8 percent
#10: U.K. Services PMI (09/05/2018 Wednesday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Services PMI dropped to 53.5 in the month of July the form 55.1 (8-month high reading) level in the prior month. The reading for July came in below analysts’ expectation of the 54.7 level. The reading still points to a robust improvement in business activity. The increase in new orders slowed down and employment increased at the weakest rate ever since August 2016 because of tight labor market situations. As far as the price is concerned, input cost inflation slowed down from the nine-month high in June and average prices levied by service providers rose by the least amount. Forecast for August 2018: 53.9
#11: Canada Trade Balance (09/05/2018 Wednesday 12:30 GMT)
Canada’s trade deficit declined to C$ 0.63 billion in the month of June after the deficit for the prior month was revised downward to C$ 2.72 billion in the month of May. The reading for June missed analysts’ expectation for a deficit of C$ 2.3 billion. This is the lowest trade deficit ever since January last year as exports jumped 4.1 percent on a month-over-month basis driven by energy products and aircraft sales. Imports fell by 0.2 percent. Forecast for July 2018: a deficit of C$0.8 billion
#12: Canada BoC Rate Statement (09/05/2018 Wednesday 14:00 GMT)
The Bank of Canada releases the Rate statement eight times in a year. The Canadian central bank uses it as a tool to communicate with traders as regards the monetary policy. It provides the outcome of members’ decision on setting interest rates and a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on future decisions.
#13: Canada Overnight Rate (09/05/2018 Wednesday 14:00 GMT)
In the meeting held in July, the Bank of Canada raised the overnight rate by 25 basis points to 1.5 percent in line with analysts’ expectations. This is the second interest rate hike this year as it is expected that inflation will edge up to about 2.5 percent prior to settling down at the 2 percent target level by the latter half of next year. Correspondingly, the bank and deposit rates are 1.75 percent and 1.25 percent, respectively. Forecast for August 2018: 1.5 percent
#14: Australia Trade Balance (09/06/2018 Thursday 01:30 GMT)
Australia’s trade surplus jumped by 158 percent to A$ 1.87 billion in the month of June after the reading for the prior month was revised downward to surplus of A$ 0.73 billion. Analysts had expected the trade surplus to come in at A$ 0.9 billion. This is by far the biggest trade surplus ever since May last year. While exports increased to an all-time high, imports declined. Forecast for July 2018: A$1.46 billion surplus
#15: U.S. ADP Non-Farm Employment Change (09/06/2018 Thursday 12:15 GMT)
In the U.S., private businesses hired 219,000 workers in July after the figure for the prior month was revised upward to 181,000. The reading for July beat analysts’ expectation of 185,000 job additions. This is the highest number of job additions in five months. While the service-providing sector hired 177,000 workers, the goods-producing sector hired 42,000 workers. Midsized companies hired the most workers, followed by small and large companies. Forecast for August 2018: 188,000 workers are expected to be hired
#16: U.S. ISM Non-Manufacturing PMI (09/06/2018 Thursday 14:00 GMT)
In the U.S., the ISM Non-Manufacturing PMI declined to 55.7 in the month of July from 59.1 in the prior month. Analysts had expected the index to come in at the 58.6 level. This is the lowest reading ever since August last year. Most firms remained positive as regards the economy and the business conditions, but tariffs and deliveries continued to remain a concern. Forecast for August 2018: 57.0
#17: U.S. Crude Oil Stocks Change (09/06/2018 Thursday 15:00 GMT)
In the U.S, the crude oil stocks dropped by 2.566 million barrels during the week that ended on August 24, following the 5.836 million barrels fall in the prior week. Analysts had expected the crude oil stocks to decline by only 0.686 million barrels. Gasoline stocks declined 1.554 million barrels against analysts’ expectation for an increase of 0.37 million barrels.
#18: Canada Employment Change (09/07/2018 Friday 12:30 GMT)
Canada added 54,100 jobs in July after hiring 31,800 workers in June. The reading for July beat analysts’ expectations for an addition of 17,000 jobs. Part-time employment rose by 82,000 but full-time employment decreased by 28,000. The employment increase was mainly driven by hiring in public sector companies. The number of employees in the private and self-employed sector remained the same. Forecast for August 2018: 5,100 workers are expected to be hired
#19: Canada Unemployment Rate (09/07/2018 Friday 12:30 GMT)
In Canada, the unemployment rate declined to 5.8 percent in the month of July from 6.0 percent in the previous month. Analysts had expected the unemployment rate to come in 5.9 percent. Forecast for August 2018: 5.9 percent
#20: U.S. Non-Farm Employment Change (09/07/2018 Friday 12:30 GMT)
In the U.S., the non-farm payrolls rose by 157,000 in July after the figure for the prior month was revised upward to a gain of 248,000 in June. Analysts had expected 190,000 job additions. Job gains were higher in business and professional services, manufacturing, and social assistance and healthcare sectors. Forecast for August 2018: 191,000
#21: U.S. Unemployment Rate (09/07/2018 Friday 12:30 GMT)
In the U.S., the unemployment rate declined to 3.9 percent in the month of July from 4.0 percent in the month of June. The reading for July was in line with analysts’ expectations. In May, the jobless rate hit an 18-year low of 3.8 percent. The number of unemployed people in the U.S. declined 284,000 to 6.3 million, while the employment remained more or less unchanged at 156.0 million.
#22: U.S. Average Hourly Earnings (09/07/2018 Friday 12:30 GMT)
In the U.S., the average hourly earnings of all private nonfarm employees increased by 0.3 percent to $ 27.05 in the month of July after the figure for the previous month was revised downward to 0.1 percent increase in June. The reading for July was in line with analysts’ expectations. On a year-on-year basis, the average hourly earnings increased by 2.7 percent. Forecast for August 2018: an increase of 0.3 percent is expected