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Fx week ahead: ECB, RBA and BoC meetings

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The British pound closed the week as the top currency gaining 1.38% relative to the US dollar. The gains came on a surprise improvement in the UK’s manufacturing PMI. Although construction PMI still showed a contraction, the better than expected improvement added to the optimism. Following the GBP, was the Kiwi dollar which also managed to post strong gains against the dollar. Gold prices which were weaker just last week managed to rise 0.36% to the dollar.

Weekly Spot FX Performance – 02/09/2016
Weekly Spot FX Performance – 02/09/2016

The US dollar closed slightly weaker after prices failed to keep up the bullish momentum from the previous week. Thursday’s ISM manufacturing PMI and Friday’s nonfarm payrolls saw investors selling the US dollar. However, despite the weakness, the Japanese yen continued to fall strongly, this week losing 1.89% against the US dollar. Following the yen, were the NOK and the SEK which were weaker over the week as well.

Economic Calendar for the Week 05/09 – 09/09

Date Time Currency Event Forecast Previous
05-Sep 01:00 JPY Average Cash Earnings y/y 0.50% 1.40%
02:30 AUD Company Operating Profits q/q 2.10% -4.70%
02:45 CNY Caixin Services PMI 51.9 51.7
03:30 JPY BOJ Gov Kuroda Speaks
08:15 EUR Spanish Services PMI 55.1 54.1
08:45 EUR Italian Services PMI 51.8 52
08:50 EUR French Final Services PMI 52 52
08:55 EUR German Final Services PMI 53.3 53.3
09:00 EUR Final Services PMI 53.1 53.1
09:30 EUR Sentix Investor Confidence 5.1 4.2
09:30 GBP Services PMI 49.1 47.4
10:00 EUR Retail Sales m/m 0.50% 0.00%
06-Sep 02:30 AUD Current Account -20.2B -20.8B
05:30 AUD Cash Rate 1.50% 1.50%
AUD RBA Rate Statement
06:45 CHF GDP q/q 0.20% 0.10%
07:00 EUR German Factory Orders m/m 0.50% -0.40%
08:15 CHF CPI m/m -0.10% -0.40%
09:10 EUR Retail PMI 48.9
10:00 EUR Revised GDP q/q 0.30% 0.30%
14:45 USD Final Services PMI 51.2 50.9
15:00 USD ISM Non-Manufacturing PMI 55.4 55.5
17:15 CHF SNB Chairman Jordan Speaks
23:45 NZD Manufacturing Sales q/q -2.60%
07-Sep 02:30 AUD GDP q/q 0.40% 1.10%
06:00 JPY Leading Indicators 98.60% 99.20%
07:00 EUR German Industrial Production m/m 0.10% 0.80%
07:45 EUR French Trade Balance -3.7B -3.4B
08:00 CHF Foreign Currency Reserves 615B
09:30 GBP Manufacturing Production m/m -0.40% -0.30%
GBP Industrial Production m/m -0.30% 0.10%
10:15 GBP MPC Member Cunliffe Speaks
14:15 GBP Inflation Report Hearings
15:00 CAD BOC Rate Statement
CAD Overnight Rate 0.50% 0.50%
CAD Ivey PMI 56.3 57
08-Sep 00:01 GBP RICS House Price Balance 2% 5%
00:50 JPY Current Account 1.59T 1.65T
JPY Final GDP q/q 0.00% 0.00%
JPY Bank Lending y/y 2.10%
JPY Final GDP Price Index y/y 0.80% 0.80%
02:30 AUD Trade Balance -2.65B -3.20B
Tentative CNY Trade Balance 372B 343B
Tentative CNY USD-Denominated Trade Balance 58.3B 52.3B
06:00 JPY Economy Watchers Sentiment 45.2 45.1
06:30 EUR French Final Non-Farm Payrolls q/q 0.20% 0.20%
12:45 EUR Minimum Bid Rate 0.00% 0.00%
13:30 CAD Building Permits m/m 2.10% -5.50%
CAD NHPI m/m 0.20% 0.10%
CAD Capacity Utilization Rate 81.50% 81.40%
EUR ECB Press Conference
USD Unemployment Claims 263K
20:00 USD Consumer Credit m/m 15.1B 12.3B
09-Sep 00:50 JPY M2 Money Stock y/y 3.30% 3.30%
02:30 AUD Home Loans m/m -1.30% 1.20%
CNY CPI y/y 1.70% 1.80%
CNY PPI y/y -1.00% -1.70%
05:30 JPY Tertiary Industry Activity m/m 0.40% 0.80%
06:45 CHF Unemployment Rate 3.30% 3.30%
07:00 EUR German Trade Balance 21.2B 21.7B
07:45 EUR French Gov Budget Balance -61.8B
EUR French Industrial Production m/m 0.20% -0.80%
09:30 GBP Goods Trade Balance -11.7B -12.4B
GBP Construction Output m/m -1.00% -0.90%
GBP Consumer Inflation Expectations 2.00%
12:45 USD FOMC Member Rosengren Speaks
13:15 CAD Housing Starts 194K 195K
13:30 CAD Employment Change -31.2K
CAD Unemployment Rate 6.90%
15:00 USD Wholesale Inventories m/m 0.10% 0.30%

Time: GMT+1

Currencies/Events to Watch this Week

AUD: Economic data from Australia will largely focus on the upcoming RBA meeting on Sep. 6. The central bank is expected to keep rates unchanged at 1.50%. However, the following day’s GDP report will be closely watched. Expectations call for a second quarter GDP growth rate of only 0.40% down from 1.10% GDP growth rate seen earlier. This could potentially put the RBA on a dovish path after last week’s retail sales data remained flat on the month.

JPY: A relatively quiet week from Japan, after Monday BoJ governor Kuroda, is expected to speak. Later in the week the final quarterly GDP data is expected to show a no change in the second quarter. The Japanese yen has eased back strongly over the past two weeks giving some respite for BoJ officials. However, going ahead the BoJ’s meeting later in September is likely to see the markets start price in expectations for a potential expansion to QE.

EUR: The ECB’s meeting next week will be the big event to watch although no changes are expected. Still, many expect the ECB to maintain a dovish view, especially after last week’s inflation data failed to provide any evidence of inflationary pressures. The Eurozone’s second quarter GDP will be released over the week which is expected to confirm the 0.30% GDP growth rate. Other data over the week includes Monday’s services PMI and Germany’s industrial production data.

GBP: From the UK, Monday’s services PMI will be the focus with expectations of an increase to 49.1, after the PMI fell to 47.4 in July. With services usually the strongest among manufacturing and construction, there is scope for a positive surprise. Later in the week, UK’s industrial and manufacturing production data will also be released, although expectations are for a contraction during August for 0.30% and 0.40% respectively. The week will also see the BoE’s inflation report hearings with the governor, Mark Carney due to testify to the UK parliament.

CAD: A busy week for Canada, the week kicks off after the markets open on Tuesday after Monday’s bank holiday. However, Wednesday’s BoC meeting will be the main event. No changes are expected with rates being held steady at 0.50%. But the scope for the BoC to come out dovish is quite high especially after weak GDP numbers last week. Ivey PMI is also due later in the day and is expected to show the index falling to 56.3 from 57.0 previously. Friday’s jobs report will be the next main event for the week.

USD: The US markets are also closed on Monday, but economic data kicks off with Tuesday’s ISM non-manufacturing PMI report. Expectations call for a slight dip to 55.4 from 55.5 in July. The remainder of the week is fairly quiet with Fed member speeches from Eric Rosengren who hasn’t yet made any comments on the Fed rate hikes.

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