global data highlights august 3rd 7th 1788702015

Monday, August 3

0145GMT – China Caixin Final Manufacturing PMI (July)

After a surprisingly large drop in the flash figure for July to 48.2, the market began to question the health of China’s manufacturing sector. This time around the market is expecting a slight improvement in the final figure to 48.3, although this is still deep in contraction territory. If sentiment deteriorates even further in July it may shake already fragile investor sentiment in Asia, hurting the region’s two main commodity currencies, the AUD and NZD.

0830GMT – UK Markit Manufacturing PMI (July)

Manufacturers have been feeling the pressure from a stronger pound lately, thus we want to see how this is affecting sentiment within the sector. In June, the index remained in expansion territory at 51.4, but it has been broadly drifting lower since peaking in 2013. This time around the market appears to be looking for a slight improvement to 51.6.

1400GMT – US ISM Manufacturing PMI (July)

After stalling in early spring this Index has recovered, leading some to suggest that the manufacturing sector is over its winter hump. The big exception to this is parts of the sector that have had to cut orders of equipment and manufacturing due to deteriorating oil prices. This time around the market is expecting the Index to remain stable during July at 53.5.

Tuesday, August 4

0130GMT – Australian retail sales and trade balance (June)

This data may take a backseat to the results of a monetary policy meeting at the RBA later in the day, but they may still have an impact on the aussie; the strength of trade exposed sectors and the pace of activity at the ground level in Australia are important ingredients in the RBA’s policy mix. Retail sales are expected to have jumped a somewhat encouraging 0.4% and the deficit is expected to widen slightly to 2.95bn in June.

0430GMT – RBA Policy Meeting

The Reserve Bank of Australia (RBA) is widely expected to leave the official cash rate at 2.00% this time around. However, there’re some in the market who think the RBA needs to cut the official cash rate further in coming months. Overnight index swap rates suggest that at the time of writing there’s around a 20% chance that the RBA will loosen monetary policy this time around, which is fairly low. Instead, it’ll be worth watching the Stevens’ accompanying statement for possible hints that the bank’s softening its bearish stance on the exchange rate or subtly changing its implicit dovish bias.

Tentative – NZ GDT Price Index

This index has become a very important release for the kiwi, as it provides an uncut look at the behaviour of dairy prices, which are NZ’s biggest export, at the ground level. Prices have dropped at the last nine auctions, including a massive 10.7% fall at the last auction in mid-July, thus another weak result could hit the kiwi hard, while a push into positive territory may calm some kiwi bears.

2245GMT – NZ employment numbers (Q2)

This release will be closely watched after Q1’s fairly dismal employment report, which added to the RBNZ’s case for looser monetary policy. This time around the market is expecting the unemployment rate to increase to 5.9% from 5.8%, with employment and wages both anticipated to increase 0.5% q/q. With the market already looking for a somewhat downbeat report, an even worse than expected set of numbers could really hurt the kiwi as it would increase the chance for further policy loosening from the RBNZ.

Wednesday, August 5

1215GMT – US ADP Non-farm employment (July)

The ADP non-farm gauge of private sector employment in the US is widely used as a key input in headline NFP expectations. In saying that, a stronger than expected ADP number for June didn’t prevent the associated headline NFP number from missing expectations. Nonetheless, it will be very closely watched by market commentators trying to decipher when the FOMC will begin hiking interest rates; this time around the market is expecting around a 210K increase.

1230GMT – US trade figures (June)

The health of trade exposed sector of the US economy is another important part of the Fed’s policy making process, especially given some recent strength in the US dollar and the negative effect this is having on exporters. While the export sector doesn’t make up a large proportion of the US economy, a lot of companies are indirectly exposed to it. We are expecting the trade deficit to have widened slightly in June to $42.25bn from $41.87bn.

Thursday, 6 August

0130GMT – Australian employment report (July)

Australia’s labour market is being closely watched by the RBA as it’s a vulnerable part of the Australian economy. So far, slowing immigration has helped keep the unemployment rate at around 6.0%, backed-up by encouraging increases in full-time employment. This time around we’re expecting the unemployment rate to rise to 6.1%, underpinned by only a 10K increase in jobs and a stable participation rate of 64.8%. There a few things to watch with this report: whether jobs lost/added are part-time or full-time, with growth in the latter seen as the healthier option; whether or not people are entering or leaving the workforce, judged by the jobs total and the participation rate.

1100GMT – BOE and MPC

The market is jostling with the possibility of the BOE hiking interest rates before the Fed, or at least just after the world’s first central bank. At present the BOE is expected to begin hiking interest rates in January, just one month after the Fed is expected to begin tighten monetary policy. The inflation report that will be released with this meeting is going to be closely watched by the market for any signs that the bank may hike sooner than expected, given recent improvements in the labour market. However, inflation still remains stagnant and could even become deflation in the near-term, which means the BOE must remain cautious.

1230GMT – Unemployment claims (August 1)

Initial jobless claims are a key input into the NFP crystal ball, thus the numbers can have a significant impact on the US dollar, especially if they beat/miss expectations by a large amount. There are no market predictions at the time of writing, but we suspect market hopes are hovering around the prior figure of 267K.

Friday, 7 August

0130GMT – RBA Statement on Monetary Policy

The RBA only releases this statement once a quarter and they are very in-depth, which means they provide a clearer picture of the RBA’s outlook for interest rates and the economy than its post-meeting statements. The market may be looking for clarification of the RBA’s implicit dovish bias, while also keeping an eye on prospects for growth and inflation.

Tentative – BOJ

The Bank of Japan’s meetings of late have largely been non-events for the market, and we aren’t expecting much to change this time around. Some members of the board have recently expressed concerns about the negative impacts of leaving stimulus in the economy for too long. Other members of the bank are leaning more towards introducing further stimulus, but we don’t think it’s going to happen this time around.

1230GMT – US NFP

Last but not least, the US is due to release its all-important non-farm payrolls and other employment numbers for July. The health of the US labour market is a major factor in the setting of monetary policy, thus it’s very closely watched by the market and the Fed alike. Successive strong employment reports are the backbone of the Fed’s case for tighter monetary policy this year and will help determine when the bank begins hiking interest rates. This time around the market appears to be expecting a headline NFP figure of 225K, the unemployment rate to remain at 5.3% and average hourly earnings to increase 2.0% m/m.