In-depth Analysis

Weekly Outlook 15-19 August

Focus on the RBNZ and the FOMC minutes

  • On Monday 15th: Japan announces its GDP for Q2, and the Chinese annual Industrial Production for July is released.
  • On Tuesday 16th: Employment figures from the UK, German ZEW Sentiment Index, U.S Building Permits, and Canadian CPI are all due today.
  • On Wednesday 17th: RBNZ Monetary Policy Meeting and related statement will be released, UK CPI, and U.S Retail Sales figures will become available.
  • On Thursday 18th: Various Australian Employment reports are released, the Eurozone CPI, and the U.S Philadelphia Federal Reserve Manufacturing Index and Housing Market Sales are due today.
  • On Friday 19th: Various UK and Canadian Retail Sales figures will become available.

Weekly Outlook

 

Monday 15th of August

The second quarter Gross Domestic Product (GDP) report from Japan is due to be published at the opening of the week, showing the strength of the economy’s overall health. It’s expected to show growth of 0.6%, up from -0.1%.

China’s annual Industrial Production report is also due and is expected to show an increase of 4.5%, compared to the previous report’s figure of 3.6%. This is the inflation-adjusted value of its industrial manufacturing, such as quarries and utilities.

Most important company announcements of the day:

  • BHP Group

 

Tuesday 16th of August

From the UK, key employment figures will be released today, including the Average Earnings Index which will show whether wages – including bonuses – are increasing or decreasing across the country, and what impact this might have on inflation. It’s expected to have risen 6.7% from 6.2% this month.

The Claimant Count Change report – which shows the number of people out of work and earning unemployment benefits in the UK compared to the previous month – will also be published, along with the 3-month moving average of Employment Changes, which shows the change in the number of people employed (forecast to be down to 170K from the previous 296K) and the Unemployment Rate also measured over 3 months is expected to be 3.9%, up from 3.8%.

From Germany, the ZEW Economic Sentiment Index for the month of August will be a look into the next half-year economic outlook from a survey of 350 institutional investors and analysts from Germany. This is expected to have dropped to the rather pessimistic number of -56.9, from -53.8.

The U.S. will release data on its monthly approved Building Permits for July, which will potentially have declined to 1.650M from 1.696M from the previous report if forecasts are correct. Knowing the number of new building permits issued by the American government can provide insights into future housing projects.

Also, on Tuesday, the Core Consumer Price Index (CPI) for Canada (July) will show the difference in the price of goods and services, excluding food and energy, from the view of the consumer.

Most important company announcements of the day:

  • Walmart Inc.
  • Home Depot Inc.

 

Wednesday 17th of August

The Reserve Bank of New Zealand (RBNZ) is expected to increase interest rates by 50 basis points again from 2.5% to 3.0% during its Monetary Policy meeting on this day, the fourth consecutive bump of the same amount since the beginning of the year. With inflation still above 7%, analysts expect that the OCR will continue to increase to 3.5% this year and 4% by mid-2023, based on the bank’s previous statement.  

The UK will release its annual Consumer Price Index (CPI) for the month of July for a look at the inflation figures on consumer items, which is expected to be slightly down from a staggering 9.4% to 9.3%.

Also, the U.S will report key monthly retail data with its Core Retail Sales and Retail Sales reports today for July. The former shows the difference in the whole value of retail sales excluding cars, fuel, food services, and building materials, and is expected to be down -0.1%, from 1%. The latter measures the difference in the aggregate value of all retail sales and is forecasted to be down .1%, from 1%.

The FOMC minutes for the meeting of July 26/27 will be published. Traders will closely monitor any changes in the vocabulary used by the Fed to anticipate its next moves and how it will react to potential upcoming higher/lower inflation figures.

Most important company announcements of the day:

  • Cisco Systems Inc.
  • Target
  • TJX

 

Thursday 18th of August

Australia will release its Employment figures today, including the Employment Change, forecast to be down to 27K from the previous month’s 88.4K, the Full Employment Change for July, and the Unemployment Rate which is expected to be 3.4% down from the previous month’s 3.5%.

The Eurozone is due to release its annual and monthly CPI data for July. Forecasts are fairly unchanged from previous levels. The annual Core CPI is expected to remain at 4% and the annual CPI should remain stable at 8.9%, if forecasts are correct.

In the U.S, the monthly Philadelphia Federal Reserve Manufacturing Index indicates the level of business conditions from a survey of 250 local manufacturers. Improving conditions are shown by a figure above 0. In August, -6.2 is forecasted as a slight improvement above the previous -12.3 in July.

Looking at the U.S housing market, the Existing Home Sales report will show sales of residential buildings from the previous month and provide insight into the overall strength of the economy. Analysts expect this figure to be down in July to 4.85M from 5.12M.

 

Friday 19th of August

The UK is due to release key retail data with the Core Retail Sales and Retail Sales reports for the month of July. Year on year Core Retail – minus cars and fuel – is predicted to drop to -6.3% from -5.9%, while the monthly report is expected to remain unchanged at 0.4%.

Canada will similarly release its monthly Core Retail Sales and Retail Sales reports for July.

Most important company announcements of the day:

  • Foot Locker Inc. 
  • Nordson Corporation

 

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