News & Analysis

Week Ahead – Attention on Global Economic Data

Agosto 12, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

 

Week Ahead

After a volatile week triggered by the controversial Yuan fixing, investors’ attention will probably return to global data and the aggressive monetary easing policies seen last week in the Asia/Pacific region.

Trade War v/s Currency War 

The Yuan rattled the markets last week as it was fixed below a symbolic level for the first time in a decade. Investors will likely closely monitor the USD/CNY daily fix by the People’s Bank of China to see if the trade war is turning into a currency war.

The damaging tariff war is unlikely to be resolved before the end of the year, and if the Yuan continues to weaken this week, we will hear more noise of a “currency war” from the US which would dent risk appetite.

Economic Data 

Aside from the geopolitical and trade tensions, the primary focus will be on the global economic data. Central banks are moving toward easing policies to stimulate their economy amid the slowing growth concerns.

We saw the Reserve Bank of New Zealand, India and Thailand slashing their interest rates last week. Policymakers are getting more and more aggressive on the momentary easing. Traders will have a slew of economic data across the United States, Germany and China to gauge the aggressive call for action for other major countries.

United States

The Federal Reserve loosened their monetary policy last month and investors will closely monitor incoming data to price-in the likelihood of a rate cut in September.

Monday: Monthly Budget Statement

Tuesday: Consumer Price Index

Thursday: Retail Sales and Jobless Claims, Nonfarm Productivity, Philadelphia Fed Manufacturing Survey and Industrial Production

Friday: Housing Starts, Building Permits and Michigan Consumer Index

The Inflation figures, Retail Sales and Industrial Production data will be key in justifying the September rate cut and could also raise the case for the Fed to deliver a 50 basis-point. The Fed was less dovish as the US economy remains in decent shape. However, with the deepening of the trade war, incoming data will be crucial in determining the odds of the Fed turning more aggressively dovish.

China

As trade tensions intensify between the two world’s largest economies, Chinese monthly data will be eyed to determine the extent of the slowdown. 

Wednesday: Retail Sales, and Industrial Production

Friday: Foreign Direct Investment

The markets are expecting a lower reading for Retail Sales and Industrial Production (YoY) at 8.6% and 5.8% respectively, which could be negative for risk appetite.

Germany

The ZEW Surveys and GDP figures in Germany and the Eurozone area will be published on Tuesday and Wednesday respectively. However, aside from the economic data, attention will be on Italian politics as the snap election raises the possibility of a far-right rule. 

Reserve Bank of Australia (RBA) 

After a more aggressive stance from the central bank of New Zealand, traders are looking for clues to see if the RBA will mirror the same dovishness.

“The Board will continue to monitor developments in the labour market closely and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”- Governor Philip Lowe.

In light of the RBA’s previous statements, the jobs report on Thursday will be heavily scrutinised.

 

Tuesday, 13 August 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 0 0.106 0.068 0.103 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 2.672


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