The upcoming week features Australian GDP and the RBA rate decision. Late in the week, Canada and the US will release key employment data.
German GDP declined by 9.7% in Q2, revised upwards from 10.1% in the initial estimate. France also recorded a dismal GDP in Q2, with a decline of 13.8%.
Canada’s GDP impressed with a gain of 6.5% in Q2, after a 4.5% in the previous quarter.
The market-mover of the week was a speech from Federal Reserve Chair Jerome Powell at the Jackson Hole meeting. Powell said that the Fed would allow inflation to overshoot its inflation target of 2.0%. This dramatic shift in policy means that interest rates will likely stay very low for the foreseeable future. This resulted in broad losses for the US dollar last week.
- German Inflation: Monday, All Day. German CPI is projected to come in at 0.0%, pointing to weak economic activity. The previous release came in at -0.5%.
- Reserve Bank of Australia Rate Decision: Tuesday, 4:30. The RBA has sounded dovish about economic conditions, but no change is expected in the Cash Rate, which has been pegged at 0.25% since March. Investors will be keeping a close eye on the tone of the RBA statement.
- Australian GDP: Wednesday, 1:30. Australia’s economy declined by 0.3% in the first quarter, reflective of the severe economic conditions to the Covid-19 pandemic. This marked the first decline since 2016. Analysts are braced for a sharp downturn in Q2, with an estimate of -6.0%. Two successive declines in GDP indicates that the economy is in recession.
- US ISM Manufacturing PMI: Tuesday, 14:00. The PMI has been in expansion territory for the past two months, with readings above the 50-level. The index rose to 54.2 in July, and the estimate for August stands at 54.5.
- US ISM Non-Manufacturing PMI: Thursday, 14:00. The index accelerated for a fourth straight month in July, climbing from 57.1 to 58.1. The forecast for August is 57.5.
- US Employment Report: Friday, 12:30. Nonfarm payrolls slowed to 1.76 million in July, down from 4.80 million beforehand. The slowdown is projected to continue in August, with a forecast of 1.51 million. Wage growth, which showed a weak gain of 0.2% in July, is expected to fall to a flat 0.0% in August. The unemployment rate fell to 10.2% in July, down from 11.1 a month earlier. The rate is expected to dip to 9.8% in August.
- Canada Employment Report: The economy had another strong month of job creation in July, with a reading of 418.5 thousand. Since May, the economy has created 1.5 million jobs. We now await the August data. The unemployment rate continues to fall, although it is still mired in double-digits. In July, unemployment fell to 10.9%, down from 12.3% beforehand. Will we see a further improvement in August?
- All times are GMT
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