On the Macro
For the Dollar:
It’s another packed week ahead on the economic calendar, following a busy week last week.
Manufacturing PMI figures kick off the week on Tuesday, with the U.S markets closed on Monday.
We expect the ISM manufacturing PMI to be the key driver, with both employment and orders needing to support.
Market focus will then shift to ADP Employment change and service sector PMI numbers on Thursday.
From the service sector numbers, the markets preferred ISM non-manufacturing PMI will have the greatest impact.
At the end of the week, the all-important labor market figures are due out. Expect nonfarm payroll and wage growth figures to have the greatest impact, assuming the unemployment rate holds steady.
We would expect trade data, factory orders, trade and productivity and unit labor cost numbers to have a muted impact on the Dollar.
Outside of the stats, FOMC member commentary and chatter from Beijing and the Oval Office will need monitoring.
The Dollar Spot Index ended the week up 1.25% to $98.807.
For the EUR:
It’s also another busy week ahead on the economic data front.
Manufacturing PMI numbers due out on Monday brings the EUR into focus early. Barring deviation from prelim figures, Italy, Spain, and the Eurozone PMIs will have the greatest impact.
With no material stats due out on Tuesday, service sector PMI and Eurozone retail sales figures will provide direction on Wednesday.
We expect the Eurozone’s composite PMI and retail sales figures to have the greatest influence on the EUR.
The focus will then shift to economic data out of Germany. July factory orders on Thursday and industrial production figures on Friday will provide direction.
Barring deviation from 2nd estimates, 3rd estimate GDP numbers for the Eurozone will unlikely to have an impact on the day.
Outside of the numbers, expect Brexit news and trade war chatter to also influence in the week.
The EUR/USD ended the week down by 1.45% to $1.0982.
For the Pound:
It’s a relatively busy week ahead on the economic calendar.
The Manufacturing PMI on Monday, Construction PMI on Tuesday and Service PMI on Wednesday will provide direction.
We can expect the Pound to also show some sensitivity to the August BRC Retail Sales Monitor due out on Tuesday.
House price figures, due out on Friday, will likely have a muted impact on the Pound.
Outside of the stats, Brexit will continue to dictate the direction of the Pound throughout the week.
The GBP/USD ended the week down by 0.90% to $1.2156.
For the Loonie:
It’s a relatively busy week ahead on the data front.
Labor productivity and trade data will provide the Loonie with direction on Wednesday.
August employment figures and Ivey PMI will also influence on Friday.
The main event of the week, however, is the BoC interest rate decision and release of the rate statement on Wednesday.
GDP numbers released last week were impressive. But, with the U.S – China trade war in full swing and the global economy slowing, a dovish BoC rate statement is expected.
We can expect the Loonie to be particularly sensitive in the run-up to the release of the rate statement.
Market sentiment towards trade and the global economy will also of influence in the week.
The Loonie ended the week down 0.21% to C$1.3311 against the U.S Dollar.
Out of Asia
For the Aussie Dollar:
It’s a relatively busy week ahead on the Economic data.
Manufacturing figures and 2nd quarter company gross operating profits due out on Monday will provide direction.
The focus will then shift to July retail sales figures due out on Tuesday. Consumer spending continues to be a key consideration for the RBA. Expect any weak numbers to weigh ahead of the RBA’s September interest rate decision later in the morning on Tuesday.
2nd quarter GDP figures due out on Thursday and July trade data on Friday will also have a material impact on the Aussie.
The main event, however, is the RBA interest rate decision and release of the rate statement.
The RBA had suggested a willingness to provide further rate cuts should the need arise. Did a shift in sentiment towards the U.S – China trade war give the RBA more breathing room?
The Aussie Dollar ended the week down by 0.34% to $0.6733.
For the Japanese Yen:
It’s also relatively busy week ahead on the economic calendar.
2nd quarter capital spending and the finalized August manufacturing PMI are due out on Monday.
With no material stats due out on Tuesday, the focus will then shift to the August service PMI on Wednesday.
The key stat of the week, however, is July household spending figures due out on Friday.
Outside of the stats, expect the Yen to find direction from monetary policy decisions, Brexit updates, and chatter on trade.
The Japanese Yen ended the week down 0.84% to ¥106.28 against the U.S Dollar.
For the Kiwi Dollar:
It’s a particularly quiet week ahead, with no material stats due out of New Zealand.
The lack of stats will leave the Kiwi at the mercy of Beijing and Washington and private sector PMIs out of China.
A dovish RBA could also weigh on Tuesday.
The Kiwi Dollar ended the week down 1.20% to $0.6328.
Out of China:
It’s a relatively quiet week ahead on the economic data front. Key stats are limited to August’s manufacturing PMI and service PMI due out on Monday and Wednesday respectively.
While we can expect the manufacturing PMI to have the greatest influence, service sector activity will need to hold steady.
Outside of the numbers, trade war chatter will continue to influence. Further positive updates would limit adverse market reaction to any disappointing numbers.
On Saturday, China’s NBS private sector PMI numbers were mixed. Manufacturing sector activity slowed at a marginally quicker pace in August, while service sector activity saw a marginal pickup in sector activity.
The Manufacturing PMI eased from 49.7 to 49.5, while the Service PMI rose from 53.7 to 53.8.
The Yuan ended the week down by 0.86% to CNY7.1565 against the Greenback.
Italy Snap General Election: Uncertainty remains on whether a snap general election can be avoided. While the Five Star Movement and Democratic Party had agreed to form a coalition government, M5S demands have raised doubts on whether the coalition will go ahead. Expect news from both parties to influence the EUR and the major European bourses.
Trade Wars: 1st September tariffs came into effect, adding tariffs on an additional $112bn worth of Chinese goods. We can expect further updates through the week, with China likely to be looking for tariffs to be withdrawn before any meaningful talks can proceed. Any escalation and expect risk aversion to hit the markets.
UK Politics: it’s gone from bad to worse for British politics. MPs are due back on 3rd September and we can expect plenty of debate over Brexit and Johnson’s plan to suspend Parliament on 10th.
Court rulings on the Queen’s agreement to suspend Parliament and any progress on a vote of no confidence will have a material impact.
The RBA: While the RBA is expected to leave rates unchanged on Tuesday, the RBA rate statement will be key. The effects of the extended U.S – China trade war continue to be reflected in stats globally. Will the RBA need to talk up the prospects of a rate cut before the end of the year?
The BoC: The BoC is also expected to leave rates unchanged on Wednesday. Better than expected GDP numbers last week suggest that Canada has managed to buck the trend until now. Will the BoC stand pat or raise concerns over the possible impact of an escalation in the U.S – China trade war and deliver a dovish statement?
The FED: FOMC member chatter in the week ahead will give the markets some guidance on what’s to come later this month. For now, expectations are for the FED to deliver a rate cut.