Last week, the U.S. dollar staged a comeback after remaining under pressure. Yellen’s speech in Jackson Hole lacked hawkishness and continued to weigh the dollar down. Further, North Korea’s firing of a missile over Japan supported the yen. On the other hand, positive data such as 3 percent US GDP growth boosted the greenback and enabled it to recover. The employment report was a little disappointing with just an addition of 156,000 jobs. EUR/USD pair rose above 1.20 but gave up the gains soon. In spite of higher inflation, the euro declined because of reports that the European Central Band doesn’t want it to remain strong. Meanwhile, the pound had a mixed week as hopes for soft Brexit met with the reality of tight negotiations.
The events scheduled for the upcoming week include the rate decisions from Australia, Euro-zone, and Canada, among others. Having said this, here is an outlook on the releases scheduled for the coming week:
#1: U.K. Construction PMI (09/04/2017 Monday 8:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI declined to 51.9 in July from 54.8 in the previous month. The reading for July missed analysts’ expectation of 54.5. This is the weakest pace of expansion in the construction sector since August 2016, as commercial building construction contracted. Housing activity also grew at a slower pace. For the first time after the post-referendum rebound, new business volumes dropped and employment expansion slowed down. Additionally, business optimism as regards growth prospects was at its lowest since July last year. Input cost inflation continued to remain elevated because of higher import item prices. Forecast for August: 52.1
#2: Australia Cash Rate (09/05/2017 Tuesday 4:30 GMT)
In the interest rate meeting held on August 1, Australia’s central bank decided to leave the cash rate at the prevailing record low level of 1.5 percent, as the analysts expected. Policymakers opined that the economic growth in the country is likely to be around 3.0 percent during the next few years and that inflation might pick up gradually when the economy strengthens. Forecast for September: 1.5 percent
#3: Reserve Bank of Australia Rate Statement (09/05/2017 Tuesday 4:30 GMT)
The Reserve Bank of Australia’s Board uses the rate statement as a tool to inform the investors about monetary policy decisions. It provides the outcome of the board’s decision on setting interest rates and a commentary on the economic conditions that impacted its decision. More importantly, the statement discusses the country’s economic outlook and provides clues on future decisions.
#4: U.K. Services PMI (09/05/2017 Tuesday 8:30 GMT)
On a seasonally adjusted basis, the headline IHS Markit/CIPS Services PMI rose to 53.8 in July from 53.4 in the previous month. The reading for July came in slightly above the market expectation of 53.6.New work growth was at a nine-month low and business sentiment for the year ahead was at the weakest level since July 2016.
New work growth rebounded from the nine-month low recorded in June and the job growth was the highest since January 2016. However, the business expectations reading for the year remained weak and lowest since the end of 2012. Input cost inflation was strong in July and the average service charges rose to the highest level in three months. Forecast for August: 53.6
#5: Reserve Bank of Australia Governor Philip Lowe Speaks (09/05/2017 Tuesday 9:10 GMT)
Philip Lowe, governor of the Australian central bank, is scheduled to speak at the Reserve Bank Board Dinner meeting to be held in Brisbane. Markets remain volatile during his speeches because traders look for interest rate clues.
#6: Australia GDP (09/06/2017 Wednesday 1:30 GMT)
Australia’s economy grew 0.3 percent in the first quarter after recording a growth of 1.1 percent in the final quarter of last year. Markets expected a growth of 0.2 percent. Final domestic demand and inventory changes contributed positively to growth but net trade and dwelling investment were weak. During the 103 quarters from June 1991 to the March 2017, Australia has not recorded negative growth for two straight quarters. This is a long stretch as far as any developed nation is concerned. Forecast for second quarter: 0.8 percent growth
#7: Canada Trade Balance (09/06/2017 Wednesday 12:30 GMT)
Canada posted a trade deficit of C$ 3.6 billion in June. The deficit widened from that of C$1.4 billion in May. Exports dropped 4.3 percent to C$46.5 billion in June because of lower unwrought gold exports and energy product sales. Imports rose 0.3 percent to C$50.1 billion driven by an increase in gold bullion. Forecast for July: deficit of C$3.8 billion
#8: Bank of Canada Rate Statement (09/06/2017 Wednesday 14:00 GMT)
Bank of Canada releases the rate statement 8 times in a year. The central bank uses this as the primary tool to communicate to investors information on monetary policy. In addition to indicating the outcome of the rate decision, it provides a commentary on factors that influenced the decision. More importantly, it provides an economic outlook and clues on the direction of future decisions.
#9: Canada Overnight Rate (09/06/2017 Wednesday 14:00 GMT)
In the meeting on July 12, the Bank of Canada hiked the benchmark overnight rate by 25 basis points to 0.75 percent as the market expected. This was the first increase since 2010 as growth was robust in spite of a temporary slowdown in inflation. The Bank Rate was increased by 25 basis points to 1.0 percent and the deposit rate was raised by 25 basis points to 0.5 percent. Forecast for September: 0.75 percent
#10: U.S. ISM Non-Manufacturing PMI (09/06/2017 Wednesday 14:00 GMT)
The ISM Non-Manufacturing PMI came in at 53.9 in July, down from 57.4 in the previous month. Analysts had expected a reading of 57.0. This is the lowest reading since August 2016. Production, employment, and new orders eased, but price pressure increased. Though there was a slowdown in the non-manufacturing sector, the expectations about the economy and business conditions were positive. Forecast for the month of August: 55.5
#11: Australia Retail Sales (09/07/2017 Thursday 1:30 GMT)
In Australia, retail sales advanced 0.3 percent on a month-on-month in June down from the 0.6 percent increase recorded in the previous month. However, the reading came in above the market expectation of 0.2 percent gain. This is the weakest gain since March. Forecast for July: 0.2 percent increase
#12: Australia Trade balance (09/07/2017 Thursday 1:30 GMT)
In June, the trade surplus of Australia narrowed 58 percent to A$ 0.86 billion after the figure for May was revised downward to A$ 2.02 billion. The market had expected a trade surplus of A$ 1.8 billion. Exports fell 1.0 percent to A$31.78 billion and imports increased 2.0 percent to A$30.92 billion, a record high. Forecast for July: surplus of 0.95 billion
#13: European Central Bank Minimum Bid Rate (09/07/2017 Thursday 11:45 GMT)
In the July meeting, the European Central Bank decided to leave the interest rates unchanged as was expected by the market. Draghi said that the recovery is still a long way off and that the euro zone requires substantial stimulus to maintain growth at the present levels. ECB’s main interest is expected to remain at the 0.00 percent level and the deposit rate at -0.4 percent. The QE bond buying program will continue to run until end of this year.
#14: European Central Bank Press Conference (09/07/2017 Thursday 12:30 GMT)
The European Central Bank press conference attended by the President and Vice President is held 45 minutes after the announcement of the minimum bid rate. The press conference lasts for an hour and has two parts: the reading of a prepared statement and open press questions. Market volatility can be expected as the questions most often lead to unscripted answers.
#15: U.S. Jobless Claims (09/07/2017 Thursday 12:30 GMT)
The number of American people filing for jobless benefits rose by 1,000 to 236,000 during the week that ended on August 26 from the revised reading of 235,000 for the previous week. The reading for the reported week was in line with analysts’ expectation. The four-week moving average, which eliminates weekly volatility, declined by 1,250 to 236,750. Forecast for the next period: 245,000
#16: U.S. Crude Oil Stocks Change (09/07/2017 Thursday 15:00 GMT)
In the U.S., crude oil stocks declined by 5.392 million barrels during the week that ended on August 25 after the previous week’s 3.327 million barrels reduction. With this, the crude oil stocks have declined for nine straight weeks now. The market had expected the stocks to drop by 1.908 million barrels. Gasoline stocks, on the other hand, increased by 0.035 million barrels against analysts’ expectation for a decline of 0.989 million barrels.
#17: China Trade Surplus (09/08/2017 Friday 2:00 GMT)
In July, China’s trade surplus came in at 321.2 billion yuan, up from 294 billion yuan for the month of June. In dollar terms, trade surplus declined to $46.74 billion from $48.61 billion on a year-on-year basis. Market expected a trade surplus of $46.08 billion as export and import growth were less. Forecast for August: $48 billion
#18: Reserve Bank of Australia Governor Philip Lowe Speaks (09/08/2017 Friday 8:30 GMT)
Philip Lowe, governor of the Australian central bank, is scheduled to deliver a speech at the Sydney branch of Bank of China as part of the bank’s 75th Anniversary Celebration Dinner. Markets often remain volatile during his speeches. This is because traders make an attempt to get clues in direction of interest rate in future.
#19: U.K. Manufacturing Production (09/08/2017 Friday 8:30 GMT)
In the U.K., manufacturing production remained unchanged in June, though industrial output increased more than expected. The U.K. Office for National Statistics reported that manufacturing production remained flat in June, following a decline of 0.1 percent (revised upward from a drop of 0.2 percent) in the previous month. The reading for June was in line with analysts’ expectation. Forecast for July: 0.3 percent growth
#20: Canada Employment Change/Unemployment Rate (09/08/2017 Friday 12:30 GMT)
In Canada, employment rose by 10,900 in the month of July, down from 45,300 reported for June. However, the data came in above market expectation of 10,000 jobs. Meanwhile, the unemployment rate decreased to 6.3 percent from 6.5 percent in the prior month. The reading came in better than analysts’ expectation of 6.5 percent. The is the lowest unemployment rate since October 2008. Forecast for August: 15,000 job addition and 6.3 percent unemployment rate