A busy week sees important central bank meetings in the US, Japan and the UK, as well as India and Brazil. Of these meetings those of the US Federal Reserve and the Bank of Japan will matter globally and in Australia.
Major data releases include the worldwide survey data for both manufacturing and services, rounding off with the US employment report on Friday night, which includes non-farm payrolls and employee earnings.
The US second quarter earnings rush continues – watch for the result from Apple while Australian June 30 earnings reports increase with mega miner, Rio Tinto releasing its interim results Wednesday.
The major events though will be the two day Fed meeting ending Thursday morning, our time and the Bank of Japan meeting tomorrow.
The Fed was expected to leave interest rates on hold but will the 4.1% annual growth rate in the first estimate of US second quarter GDP force a change of heart?
If it does that will upset Donald Trump who doesn’t understand why US interest rates are rising. If the Fed sits this week it will increase rates at its September meeting.
Friday night, our time sees the US jobs report for July, with wages data as well.
The AMP’s Dr Shane Oliver says we can expected another solid gain in payrolls of around 190,000, unemployment falling back to 3.9% and wages growth remaining around 2.7% year on year.
Tonight sees the June monthly report on personal consumption expenditure (PCE), which is closely watched by the Fed. The June quarter national accounts showed core PCE inflation easing in the three months.
The July manufacturing conditions index will be out Wednesday along with July car sales which could show some surprise falls in sales volumes.
The US trade deficit is out on Friday is likely to worsen (which could see a revision to the 4.1% GDP growth rate next month).
June quarter earnings results will continue to flow with Apple the major result to be release on Wednesday, Australian time. (See separate story).
In Asia, the key Bank of Japan meeting tomorrow will be watched to see if there is any tightening of its very loose monetary policy.
The AMP’s Dr Oliver says “The Bank of Japan (BoJ) meets Tuesday but while it may signal a fine tuning it’s unlikely to signal any exit from ultra-easy monetary policy."
“With the BoJ likely to revise down its inflation forecasts and inflation running a long way from target any changes it makes will be aimed at improving the sustainability of its ultra-easy monetary policy as opposed to ending it.
“This could take the form of greater flexibility on its bond yield target, possibly contingent on higher inflation,” Dr Oliver wrote at the weekend.
June jobs and industrial production data for Japan will also be released tomorrow.
In China the start of month surveys of business conditions will be watched for signs of an impact from the trade skirmish.
Dr Oliver says we can expect manufacturing PMIs to fall slightly but services PMIs to be little changed consistent with a slight slowing in GDP growth to 6.5%.
In the Eurozone, June quarter GDP tomorrow is likely to be around 0.4% quarter on quarter or 2.2% year on year as the March quarter slowing in growth continues but Eurozone economic confidence (tonight) is likely have remained solid and June unemployment (Tuesday) is likely to have edged down to 8.3% (from 8.4%).
Dr Oliver says we can look for core CPI inflation to edge back up to an annual 1%.
In Britain the Bank of England on Thursday will consider another rate hike to take the policy rate from 0.5% to 0.75%.
Up to a few weeks ago a rate rise was considered to be a near certainty, but weak data and the floundering over Brexit might make the central bank hesitant to lift rates again.
In Australia, June building approvals and credit growth are both out tomorrow – there may be a small rise in approvals.
July house price data on Wednesday will show another fall in capital city prices, while the trade data for June is expected to show a small surplus and a small rise in June retail sales is forecast in the monthly data to be released on Friday.
The July surveys of manufacturing activity and services are both expected to be solid, while car sales for July are forecast to show a small fall.
Australian June half year and full year earnings reports starting flowing a little faster this week (See separate story).
Telstra is poised to unveil a major management restructure as early as today with CEO Andy Penn forecast to announce the first round of his planned overhaul of the battling telecommunications company management.
The new strategy see see the loss of 8,000 jobs and a plan to split off old infrastructure assets into a separated subsidiary.
