Weekly Outlook: August 6 - 9

Aug 05, 2018

There aren’t many major events on the economic calendar this week, but there will still be a few events to watch out for. Friday will see an update on consumer prices for July, which will be the week’s most closely watched U.S. data release.

Elsewhere, monetary policy updates are due Tuesday from the Reserve Bank of Australia, which is widely expected to keep rates on hold at 1.5%, and the Reserve Bank of New Zealand, which is expected to hold rates steady at 1.75% on Thursday.

Market watchers will also be keeping an eye on geopolitical developments, with U.S. sanctions on Iran due to come into effect again on Monday and as trade-related tensions continue to simmer.

The dollar held steady against a basket of the other major currencies on Friday after data showing that while U.S. job growth slowed more than expected in July labor market conditions continued to tighten, supporting expectations for two more rate hikes from the Federal Reserve this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was almost unchanged for the day at 95.03 late Friday. The index gained 0.53% for the week.

The jobs report came after the Fed kept interest rates on hold on Wednesday, but said the U.S. economy was strong, indicating that it is on track to deliver expected rate hikes in September and December.

The dollar slipped lower against the yen on Friday, with USD/JPY sliding 0.33% to 111.27 after China proposed retaliatory tariffs on $60 billion worth of U.S. imports, escalating a trade conflict between the world’s two largest economies, which investors fear will act as a drag on global growth.

The Japanese currency is often sought by investors as a safe haven during times of geopolitical or financial turmoil.

The euro was lower against the dollar, with EUR/USD down 0.15% to 1.1567 in late trade.

The pound briefly slipped below the 1.30 level, with GBP/USD touching a low of 1.2976 after Bank of England Governor Mark Carney warned that there is an “uncomfortably high” risk of Britain exiting the European Union with no deal.

Meanwhile, the Turkish lira plumed a fresh record low against the U.S. dollar on Friday, with USD/TRY touching 5.1135 amid fears over growing tensions between Washington and Istanbul.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, August 6

Financial markets in Canada will be closed for a holiday.

Tuesday, August 7

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Wednesday, August 8

New Zealand is to release data on inflation expectations.

China is to publish its latest trade figures.

Thursday, August 9

The Reserve Bank New Zealand is to announce its benchmark interest rate and publish its rate statement. The bank will also hold a press conference to discuss the policy decision.

China is to publish data on inflation.

Canada is to release industry data on new house price inflation.

The U.S. is to produce reports on producer price inflation and the weekly report on jobless claims.

Friday, August 10

Japan is to release preliminary data on second quarter growth

The UK is to publish preliminary data on monthly GDP growth, as well as reports on manufacturing production, business investment and trade.

Canada is to produce its jobs report for July.

The U.S. is to round up the week with a report on consumer price inflation.