Weekly Market Outlook: A Busy Schedule of Events
The economic calendar for the week ahead is expected to remain sparse due to the summer lull. Yet, despite the quiet period ahead, a few economic events will be of interest for market participants.
Key events stand out over the week including the meeting minutes from the Federal Reserve and the RBA. The annual Jackson Hole Symposium is also due which will, no doubt, generate some interest.
This comes on the back of various central banks moving to an easing cycle and the main trade war narrative. This week also hosts the G7 summit happening in France.
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Japan’s Data Under Scrutiny
Last week, Japan posted a strong GDP number for the second quarter, rather surprisingly. Investors will be looking to key economic indicators such as the trade balance, inflation data, and manufacturing sectors. The data will likely provide more information on how the economy is faring and whether the second-quarter strength in GDP will spill into the third quarter as well.
July Trade Figures to Show Falling Exports
Economists polled expect the trade figures due on Monday to fall 2.2% on the year. This is later followed by the flash manufacturing PMI for August. Manufacturing, as per the current trend, is expected to remain weak.
Inflation Expected to Remain Unchanged in July
The economic data from Japan ends with the inflation figures due on Friday. Japan’s core CPI, which excludes the volatile food and energy prices, is expected to remain unchanged in July.
In the previous month, the core CPI fell to a two-year low of 0.6% in June. The stubbornly low inflation gives the BoJ officials an impetus to ramp up its stimulus program. But, so far, officials have been skeptical about increasing the QE program.
ECB Minutes & Flash PMIs to Set Tone for Euro
After the European Central Bank dropped ample clues about potential easing, it followed through by officially confirming this at the July ECB meeting.
Draghi said that the central bank was looking to lower interest rates further and even restart the QE program. However, the decision for this is likely to come at the September monetary policy meeting. In the run-up to this big-ticket event, data from the eurozone will be closely watched.
The Italian prime minister will also be facing a vote of no confidence this week on August 20th.
Flash PMI & Inflation Figures to Give Broad Economic Picture
The week is relatively quiet with no top tier data coming out. However, the final inflation figures for the eurozone are due this week. Headline CPI rose by 1.1% on the year ending July, while core CPI rose to a pace of just 0.9% during the same period.
The final inflation figures will likely confirm the view that inflation remains weak for the eurozone. This will likely raise the prospects of some action from the ECB this week.
ECB Minutes Could Give More Clarity to Investors
This week, the central bank will be releasing its monetary policy meeting minutes. The minutes will likely show the deliberations behind the scenes. The plan to restart QE is once again raising some opposing views from within the governing council. The main question from investors is how far the central bank will go in regards to building a sizeable stimulus program.
Jackson Hole Symposium to Overshadow Quiet Week
Not much is happening on the US front as far as the economic calendar is concerned. The Jackson Hole symposium will start this week, with the G7 meeting following a few days later. Trade war disputes and the central bank monetary policy course will be the main topics of discussions during these events.
Symposium Focuses on Monetary Policy Challenges
The annual Jackson Hole symposium is entitled “Challenges for Monetary policy.” The theme comes as various central banks have turned dovish, with some even moving to an easing cycle. Fed Chair, Jerome Powell will be speaking on August 23.
Fed Meeting Minutes to Give More Clarity on Fed
On Wednesday, the Federal Reserve will be releasing its monetary policy meeting minutes. The minutes cover the July FOMC meeting where the central bank lowered interest rates by a quarter basis point. However, the rate cut was not unanimous. There were two dissenting voters during the meeting.
The central bank chief also made it very clear that the rate cut was only an adjustment rather than the start of the easing cycle. The FOMC meeting and the Jackson Hole symposium are back to back and this could see some volatility for the USD.