UPCOMING EVENTS:
- Tuesday: PBoC MLF, Australia Wage Price Index, China Industrial Production, UK Jobs Report, German ZEW, US Retail Sales, Canada CPI, NAHB Housing Market Index.
- Wednesday: RBNZ Policy Decision, UK CPI, FOMC Meeting Minutes.
- Thursday: Australia Jobs Report, US Jobless Claims.
- Friday: Japan CPI, UK Retail Sales.
Tuesday
The PBoC is expected to keep the MLF rate unchanged. Chinese authorities recently promised more policy support though and that included RRR cuts, OMO, and rate cuts from the PBoC. The Chinese economic data has been ugly, and the country recently slipped into deflation, so it’s common sense to expect more support. The other side of the coin is that more stimuli would pressure the yuan further and we’ve seen how they dislike this as they’ve been constantly intervening to stem the depreciation.
Wages data is something the central banks are watching closely lately as they look for signs of wage-price spiral. The Australian Wage Price Index for Q2 Y/Y is expected at 3.8% vs. 3.7% prior, while the Q/Q reading is seen at 1.0% vs. 0.8% prior.
The UK Unemployment Rate is expected to remain steady at 4.0%. The focus should be on the wages data (barring a big jump in the unemployment rate) with the Average Earnings ex-Bonus expected at 7.4% vs. 7.3% prior and Average Earnings + Bonus seen at 7.3% vs. 6.9% prior.
The US Retail Sales M/M are expected to rise 0.4% vs. 0.2% prior, while the Y/Y reading is seen at 1.5% vs. 1.49% prior. The Control Group is seen as a better gauge of consumer spending so this is the number that will likely matter the most. There’s no consensus at the moment but the prior release saw a 0.6% increase.
The Canadian CPI Y/Y is expected to ease to 2.7% vs. 2.8% prior. The BoC is more focused on the underlying inflation data but given the recent weakness in retail sales and the uptrend in the unemployment rate (although wage growth jumped), the central bank is likely to respond with a hike only if the data beats. The Common CPI Y/Y is expected at 4.7% vs. 5.1% prior; the Trimmed Mean CPI Y/Y is seen at 3.4% vs. 3.7% prior and the Median CPI Y/Y is expected at 3.7% vs. 3.9% prior. As a reminder, the BoC target range is 1-3%.
Wednesday
The RBNZ is expected to keep the OCR unchanged as the central bank paused its tightening cycle to see how things evolve. The data has been mixed so far but inflation and wage growth eased further with the unemployment rate also ticking higher. Overall, it should be enough for them to keep rates steady at this meeting as well.
The UK CPI Y/Y is expected at 6.8% vs. 7.9% prior, while the M/M reading is seen at -0.5% vs. 0.1% prior. The Core CPI Y/Y is expected at 6.8% vs. 6.9% prior, while the M/M figure is seen at 0.3% vs. 0.2% prior. As a reminder, the BoE is expected to hike again by 25 bps at the September meeting.
Thursday
The Australian Jobs Report is expected to show 21.5K jobs added vs. 32.6K prior with the Unemployment and Participation Rates remaining steady at 3.5% and 66.8% respectively.
The US Jobless Claims remain a key labour market data and a big market mover. Initial Claims are expected at 240K vs. 248K prior, while Continuing Claims are seen at 1700K vs. 1684K prior.
Friday
The Japanese CPI Y/Y is expected to ease to 2.5% vs. 3.3% prior with the Core CPI Y/Y also seen cooling to 3.1% vs. 3.3% prior. There’s no forecast for the Core-core reading at the moment, but the prior figure showed a 4.2% increase. As a reminder, the Tokyo CPI, which is seen as a leading indicator for nationwide inflation, beat expectations across the board with the Core-core reading rising to 4.0% vs. 3.7% expected and 3.8% prior.
