Market participants continue to digest the latest US inflation data released last week. Meanwhile, more and more US central bank officials advocate for an interest rate cut at the upcoming Fed meeting scheduled for September 17-18.
However, if the US macro data remains positive, the Fed may continue to take a wait-and-see stance. When the FOMC July meeting minutes are released at 18:00 on Wednesday, market participants may have more information on the issue.
In the coming week of 19.08.2024 – 25.08.2024, market participants will monitor the release of important macro data on Canada, Germany, the eurozone, the UK, the USA, and the results of the People’s Bank of China and Reserve Bank of Australia meetings.
Besides, the annual Jackson Hole symposium on monetary policy will commence this week, with Fed Chairman Jerome Powell slated to deliver the opening speech. Market participants are mainly focused on the probability and extent of Fed monetary policy easing this and the following year.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: no important macro statistics is scheduled.
- Tuesday: Canada’s inflation figures.
- Wednesday: July FOMC Meeting Minutes.
- Thursday: Germany, the eurozone, the UK, and the US preliminary PMI indexes for August.
- Friday: no important macro statistics is scheduled.
- Key event of the week: July FOMC meeting minutes release.
Monday, August 19
There are no important macro statistics scheduled to be released.
Tuesday, August 20
01:15 – CNY: People’s Bank of China interest rate decision
Since May 2012, the People’s Bank of China has been steadily lowering its interest rate to support Chinese manufacturers. Last time, the bank lowered the rate in July 2024 after a long pause since August 2023, bringing the rate down by 0.1% to its current level of 3.35%.
In 2024, the world’s major central banks have also started a policy easing cycle amid slowing inflation. What will the Chinese central bank do this time after pausing since September 2023 and easing policy in July 2024?
The People’s Bank of China will likely keep the interest rate unchanged at 3.35% at this meeting, although other decisions are also possible.
Should the People’s Bank of China make statements that deviate from expectations, volatility may increase across the entire financial market, particularly in the Asian one. Investors will closely watch the bank’s assessment of the Chinese economy’s prospects and its policy stance in the short term.
01:30 – AUD: Reserve Bank of Australia Meeting Minutes
The document is published two weeks after the meeting and the interest rate decision. If the RBA is optimistic about the country’s labor market and GDP growth rate and is hawkish on the inflation outlook, the rate may be increased at the next meeting, which is favorable for the Australian dollar. The bank’s dovish rhetoric on inflation, in particular, is putting pressure on the Australian dollar.
During the recent August 2024 meeting, the RBA paused again, keeping the interest rate at a 12-year high of 4.35%. However, the RBA signaled the possibility of a further increase if inflation starts to accelerate.
Australian annual inflation accelerated again to 3.8% in Q2 2024 from 3.6% in Q1. The RBA anticipates that it will remain within the 2%–3% target range until 2025. Without intervention, it will rise again. This suggests that the central bank will at least have to keep rates higher for longer than previously expected. However, Australian central bank officials are optimistic that the current restrictive policy will help inflation return to the 2.0%–3.0% targets.
The board’s decision to tighten monetary policy in order to ensure that inflation returns to target within a reasonable time frame will depend on incoming data and the evolving risk assessment.
If the released minutes contain unexpected information regarding the RBA monetary policy issues, the volatility in the Australian dollar will increase.
12:30 – CAD: Consumer Price Indexes in Canada
The Consumer Price Index (CPI) reflects the retail price trends of a selected basket of goods and services. Meanwhile, the Core CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. The inflation target for the Bank of Canada ranges between 1% and 3%. A higher CPI reading is a sign of a rate hike and is positive for the Canadian dollar.
Previous values:
- CPI: -0.1% (+2.7% YOY), +0.6% (+2.9% YOY), +0.5% (+2.7% YOY), +0.6% (+2.9% YOY), +0.3% (+2.8% YOY), 0% (+2.9% YOY), -0.3% (+3,4% YOY), +0.1% (+3, 1% YOY), +0.1% (+3,1% YOY), -0.1% (+3, 8% YOY), +0.4% (+4, 0% YOY), +0.6% (+3, 3% YOY), +0.1% (+2, 8% YOY);
- Core CPI released by the Bank of Canada: -0.1% (+1.9% YOY), +0.6% (+1.8% YOY), +0.2% (+1.6% YOY), +0.5% (+2.0% YOY), +0.1% (+2.1%YOY), +0.1% (+2.4% YOY), -0.5% (+2,6% YOY), +0.1% (+2.8% YOY), +0.3% (+2.7% YOY), -0.1% (+2.8% YOY), +0.1% (+3.3% YOY), +0.5% (+3.2% YOY), -0.1% (+3.2% YOY).
The data suggests that inflation continues to decelerate, which prompts the Canadian central bank to consider implementing a dovish monetary policy. If the expected data is worse than the previous values, it will negatively affect the Canadian dollar, but if the data exceeds expectations, it will bolster the currency.
Wednesday, August 21
18:00 – USD: July FOMC Meeting Minutes
The minute’s release is extremely important for determining the course of the Fed’s current policy and the prospects for US interest rate hikes. Volatility in financial markets usually increases during the minute’s publication, as they often reveal changes or provide clarifications from the latest FOMC meeting.
Central bank governors decided to maintain the federal funds rate within the range of 5.25%–5.50% as a result of the meeting ended on July 31, 2024.
The accompanying statement reiterated that the Fed is not inclined to lower rates unless there is strong evidence that inflation is steadily approaching the 2% target. At the same time, Fed Chairman Jerome Powell hinted at the possibility of a rate cut in the upcoming September meeting but did not state this affirmatively either.
“We can maintain the current level of restriction for as long as needed,” Powell noted earlier.
Market participants now expect the Fed’s first interest rate cut in September, with at least two more cuts anticipated to take place by the end of the year.
The dovish tone of the minutes will positively impact stock indices and negatively affect the US dollar. The hawkish Fed’s rhetoric on the monetary policy may boost the US dollar.
Thursday, August 22
07:30 – EUR: Manufacturing and Services Purchasing Managers’ Index of the German Economy by S&P Global. Composite Purchasing Managers’ Index of the German Economy by S&P Global (Preliminary Release)
The manufacturing and services PMIs are important indicators of the business environment and the health of the German economy. These sectors play a significant role in Germany’s GDP. A reading above 50 indicates a positive outlook and bolsters the euro, while a reading below 50 is negative for the euro. Conversely, data worse than the forecasted and/or the previous value will prove to be negative for the euro.
Previous values:
- Manufacturing PMI: 43.2, 43.5, 45.4, 42.5, 41.9, 42.5, 45.5, 43.3, 40.8, 39.6, 38.8, 40.6, 43.2, 44.5, 44.7, 46.3, 47.3, 47.1, 46.2, 45.1, 47.8, 49.1, 49.3, 52.0, 54.8, 54.6;
- Services PMI: 52.5, 53.1, 54.2, 53.2, 50.1, 48.3, 47.7, 45.7, 48.2, 50.3, 52.3, 54.1, 57.2, 56.0, 53.7, 50.9, 50.7, 49.2, 46.1, 46.5, 45.0, 47.7, 49.7, 52.4, 55.0, 57.6, 56.1, 55.8;
- Composite PMI: 49.1, 50.4, 52.4, 50.6, 47.7, 46.3, 47.0, 47.4, 45.9, 46.4, 48.5, 50.6, 53.9, 54.2, 52.6, 50.7, 49.9, 49.0, 46.3, 45.1, 45.7, 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6.
08:00 – EUR: Manufacturing and Services Purchasing Managers’ Index. Composite Purchasing Managers’ Index of Eurozone Manufacturing Activity by S&P Global (Preliminary Release)
The eurozone manufacturing and services PMIs are significant indicators of the European economy state. Readings above 50 are positive and strengthen the euro, while readings below 50 are negative for the currency. If the figures are worse than the forecasted and/or the previous value, the euro will be affected negatively.
Previous values:
- Manufacturing PMI: 45.8, 45.8, 47.3, 45.7, 46.1, 46.5, 46.6, 44.4, 43.1, 47.2, 42.7, 43.4, 44.8, 45.8, 47.3, 48.5, 48.8 in January 2023;
- Services PMI: 51.9, 52.8, 53.2, 53.3, 51.5, 50.2, 48.4, 48.8, 47.8, 48.7, 50.9, 52.0, 55.1, 56.2, 55.0, 52.7, 50.8 in January 2023;
- Composite PMI: 50.2, 50.9, 52.2, 51.7, 50.3, 49.2, 47.9, 47.6, 46.5, 47.2, 48.6, 52.8, 54.1, 53.7, 52.0, 50.3, 49.3 in January 2023.
08:30 – GBP: Manufacturing and Services Purchasing Managers’ Index. Composite Purchasing Managers’ Index of the UK Manufacturing Sector by S&P Global (Preliminary Release)
The manufacturing and services PMIs serve as a vital indicator of the UK economy’s health. The service sector employs the majority of the UK’s working-age population and contributes approximately 75% of GDP. Financial services continue to be the most important part of the service sector. If the data is worse than forecast and the previous value, the British pound will likely experience a short-term but sharp decline. If the data exceeds the forecast and the previous value, it will have a positive impact on the currency. At the same time, a PMI reading above 50 is favorable and strengthens the British pound, while a reading below 50 is negative for the currency.
Previous values:
- Manufacturing PMI: 52.1, 50.9, 51.2, 49.1, 50.3, 47.5, 47.0, 46.2, 44.8, 44.3, 45.3, 46.5, 47.1, 47.8, 47.9, 49.3, 47.0, 45.3, 46.5, 46.2, 48.4;
- Services PMI: 52.5, 52.1, 52.9, 55.0, 53.1, 53.8, 54.3, 53.4, 49.5, 49.3, 51.5, 53.7, 55.2, 55.9, 52.9, 53.5, 48.7, 49.9, 48.8, 48.8, 50.0, 50.9, 52.6;
- Composite PMI: 52.8, 52.3, 53.0, 54.1, 52.8, 53.0, 52.9, 52.1, 48.7, 48.5, 50.8, 52.8, 54.0, 54.9, 52.2, 53.1, 48.5 in January 2023.
13:45 – USD: Manufacturing and Services Purchasing Managers’ Index of the US Economy by S&P Global. Composite Purchasing Managers’ Index (Preliminary Release)
The PMIs of the most important US economic sectors, released by S&P Global, are an important gauge of the US economic condition. A PMI reading above 50 signals bullishness, bolstering the US dollar, whereas a reading below 50 bodes negatively for the greenback.
Previous values:
- Manufacturing PMI: 49.6, 51.6, 51.3, 50.0, 51.9, 52.2, 50.7, 47.9, 50.0, 49.8, 49.0, 46.3, 48.4, 50.2, 47.3, 46.9, 46.2, 47.7, 50.4, 52.0, 51.5;
- Services PMI: 55.0, 55.3, 54.8, 51.3, 51.7, 52.3, 52.5, 51.4, 50.6, 50.1, 52.3, 54.4, 54.9, 53.6, 50.6, 46.8, 44.7, 46.2, 47.8, 49.3, 43.7, 47.3, 52.7, 53.4, 55.6;
- Composite PMI: 54.3, 54.8, 54.5, 51.3, 52.1, 52.5, 52.0, 50.9, 50.7, 50.2, 52.0, 53.2, 54.3, 53.4, 52.3, 50.1, 46.8 in January 2023.
14:00 – Annual Economic Symposium in Jackson Hole, Wyoming.
At the symposium sponsored and organized by the Fed, representatives of the world’s central banks and economists will discuss global economic issues and express their views on the subject, as well as on the prospects for monetary policy. The statements of major world central banks’ officials may significantly influence the national currencies and the overall market movement.
22:45 – NZD: Retail Sales for Q2
The retail sales data is published by the Statistics New Zealand. Change in retail sales volume is usually considered an indicator of consumer spending. Generally, a high indicator’s reading is positive for the New Zealand dollar, while a low reading is negative. In Q1 2024, the retail sales volume indicator showed a gain of +0.5% after a decline of -1.8% in Q4 2023, -0.9% in Q2, -1.6% in Q1, -0.6% in Q4 2022. The decline in retail sales is bearish for the New Zealand dollar.
The New Zealand dollar may strengthen if data exceeds the forecast or previous values, while a weak report will adversely affect the currency.
Friday, August 23
There are no important macro statistics scheduled to be released. However, investors who monitor the Canadian dollar movement will focus on the Canadian June retail sales data publication at 12:30. The change in retail sales is usually considered a gauge of consumer spending. Overall, a high value of the indicator is a positive factor for the national currency, while a low value is a negative one. Another decline in the indicator after a -0.8% drop in the previous month will likely negatively affect the Canadian dollar.
14:00 – Annual Economic Symposium in Jackson Hole, Wyoming
Price chart of USDCAD in real time mode
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