Next week will be calmer in terms of data releases relative to this one, though certain figures from major economies will definitely grab the markets participants’ attention. In terms of central bank meetings, the Reserve Bank of New Zealand will meet to set monetary policy, while oil prices may experience added volatility given that a meeting to monitor compliance with output cuts will be taking place in Abu Dhabi.
RBNZ decision on monetary policy
The Reserve Bank of New Zealand will be announcing its latest decision on monetary policy next week. The Bank’s official cash rate currently stands at the record low of 1.75%. During this past week, the country has been on the receiving end of weaker-than-expected employment figures. These contributed to the kiwi’s fall from the more than two-year highs it experienced last week relative to the greenback as kiwi/dollar rose climbed the 0.75 handle. It would be interesting to see whether those figures will push any policy normalization plans further down the road.
Out of Asian markets, potentially of most interest would be July trade data out of China given that the world’s second largest economy traditionally relies on exports to boost growth. Imports are also of significance given the growing importance of consumer demand as the nation is attempting to rebalance its growth model to one that’s more heavily dependent on domestic demand. Beyond this, July inflation and producer prices would also be of interest to investors. Moving to Japan, it will, among others, see the release of current account numbers and machinery orders for June.
Europe in broadly quiet mode
Next week looks like it will not be particularly exciting in terms of European releases. The Sentix index gauging investor confidence in the eurozone for the month of August could attract some attention by forex market participants. Beyond that, of most interest in Germany, Europe’s largest economy, would be June industrial output and trade data, as well as final inflation numbers for the month of July.
Sterling received a blow this week as markets interpreted the Bank of England’s monetary policy decision, meeting minutes and quarterly inflation report as being on the dovish side overall. Consequently, sterling tumbled relative to majors including the dollar and the euro – more notably versus the latter one as euro/pound rose to a nine-month high above the 0.90 handle. Next week will see the release of Halifax house prices for July, as well as industrial and manufacturing output figures for the month of June. It remains to be seen whether any positive surprises have the capacity to reverse the negative backdrop that seems to have set in for the pound.
JOLTS report and inflation numbers out of the US
Earlier in the week, June consumer credit and the JOLTS report on jobs openings for the same month will be gathering most attention. On Wednesday, preliminary labor costs and productivity numbers for the second quarter of the year will dominate investors’ focus. Finally, producer prices and CPI data will be closely watched on Thursday and Friday respectively. It remains to be seen whether the weaker dollar in recent weeks will spur inflationary pressures and bring the Federal Reserve closer to delivering a rate hike during its December meeting. Expectations are for inflation to rise to 1.8% year-on-year in July, up from 1.6% during the previous month.
Diverting from forex markets, officials from OPEC and non-OPEC countries participating in the deal to reduce production by about 1.8 million barrels per month will be meeting in Abu Dhabi on August 7 and 8 to discuss ways to boost compliance with their supply cut agreement. Similar discussions during a meeting in the Russian city of St. Petersburg in late July led to oil prices rallying.
