UPCOMING EVENTS:
- Monday: US and Canada Holiday.
- Tuesday: China Caixin Services PMI, RBA Policy Decision.
- Wednesday: Eurozone Retail Sales, US ISM Services PMI, BoC Policy Decision.
- Thursday: China Imports/Exports data, Switzerland Unemployment Rate, US Jobless Claims.
- Friday: Japan Wage data, Canada Jobs Report.
Tuesday
The RBA is expected to keep the cash rate unchanged at 4.10% as the economic data heading into the meeting surprised to the downside. In fact, the jobs report showed a jump in the unemployment rate (although still within the 1-year range), the wages and the inflation data missed expectations, and the PMIs remain in contraction.
Wednesday
The US ISM Services PMI is expected to tick lower to 52.5 vs. 52.7 prior. The S&P Global US Services PMI released two weeks ago missed expectations by a big margin and the comments from the Chief Business Economist do not look rosy on the outlook as he stated that: “A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded”.
The BoC is expected to keep rates unchanged at 5.00%, although there’s a good chance that they decide to raise rates by 25 bps. In fact, the Canadian underlying inflation measures, which is what the central bank is currently focusing on, beat expectations in the latest inflation report, while the labour market report showed a big jump in average hourly earnings, although it was accompanied by another increase in the unemployment rate. The BoC might even want to skip this meeting and see more data before deciding whether another rate hike is needed.
Thursday
The US Jobless Claims remains a key labour market report as the Fed and the Market are particularly focused on the jobs data. Last week, we saw a beat in Initial Claims but a miss in Continuing Claims, which lag Initial Claims by a week and show how fast people are able to secure jobs after getting unemployed. The consensus this week sees Initial Claims at 235K vs. 228K prior and Continuing Claims at 1715K vs. 1725K prior.
