What mattered last week:
- U.S. stocks posted a second straight week of gains as a chain of unrelated though positive events combined to lift optimism.
- Including the news that the U.S. and China would resume trade talks, the withdrawal of the extradition bill in Hong, Kong, a decision to approve a law to delay to Brexit as well as some favourable economic data in China and the U.S.
- In Canada, the Bank of Canada (BoC) held its policy rate steady at 1.75% and delivered a more neutral statement than expected.
- Locally, the release of June quarter GDP and retail sales for July confirmed the Australian economy is growing at its slowest pace in 10 years.
- Partially offsetting this, the current account returned to surplus for the first time in Australia since 1975.
- The ASX200 closed the week 0.65% higher at 6647, again underperforming the S&P500 which posted a 2% gain for the week.
- In FX, the AUDUSD bolstered by flows into risky assets closed at its highest level in 6 weeks ~.6850.
For the week ahead, the key events are:
Australia: Housing finance (Monday), NAB business confidence (Tuesday), Westpac consumer confidence (Wednesday).
- July housing finance approvals (Monday): Rate cuts and a recovery in house prices should result in a modest lift in lending of 1.0%.
New Zealand: Manufacturing sales (Monday), business NZ PMI (Friday).
China: CPI and PPI (Tuesday), new yuan loans and total social financing (Friday).
- CPI (Monday): CPI is expected to rise by 0.5% in August.
Japan: Current account (Monday), machine tool orders (Tuesday), machinery orders and PPI (Thursday), industrial production and capacity utilisation (Friday).
U.S.: PPI (Wednesday), CPI (Thursday), retail sales (Friday).
- Retail sales (Friday): Weaker gasoline prices are expected to impact the headline retail sales number and result in a rise of 0.3%. The retail control metric (ex-autos, gasoline, and building permits) is likely to decelerate from 1.0% in July to 0.3% in August.
Canada: Housing starts (Tuesday), capacity utilisation (Wednesday), new housing price index (Thursday).
Euro Area: German balance of trade and current account (Monday), EA industrial production and ECB interest rate meeting (Thursday), EA balance of trade and wage growth (Friday).
- ECB interest rate meeting (Thursday): To boost weak growth and low inflation, the ECB is expected to announce a cut to the deposit rate by 20bps in September and by another 20bp in December. The market is divised as to whether the ECB will restart quantitative easing in September or wait until December.
UK: Balance of trade and GDP (Monday), labour market report (Tuesday).
- UK labour market report (Tuesday): Despite the Brexit saga, the unemployment rate is expected to remain near to multi-decade lows at 3.9%.
Disclaimer
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