The week sees the usual start of month week globally made more difficult to read accurately by the continuing ravages of COVID-19, especially in the US and here in Victoria.
There’s the shock downgrade of America’s AAA credit rating by the Fitch group, something that will be discussed in forex markets where the US dollar is under pressure and smaller currencies like the Aussie have risen sharply in recent weeks.
But the major event globally will be the release of the US July jobs data on Friday – it will not make for good reading and there could be a surprise rise, however small.
Gold is charging towards $US2,000 an ounce, silver has bounced, copper though has faded and iron ore prices are steady.
Sharemarkets though will be wary because of the rising tide of coronavirus infections, Donald Trump’s growing instability and worries about corporate earnings.
China reports its July trade data on Friday after another of the two surveys of manufacturing activity. The first survey, the government one was out on Friday was better than expected with a rise back to a normal reading around 51.
The June 30 earnings season steps up in Australia, peaks in the US, and continues in Japan, China, Europe, and the UK with those fears about the strength of earnings front and centre, despite the high results from US tech giants last Friday.
Oil is also steady but starts the month facing an extra two million barrels of oil a day coming onto the market at a time when demand is under pressure from the rapid advance of new COVID-19 cases and deaths.
Today and tonight sees the start of months surveys of manufacturing activity around the globe, followed later in the week by the monthly survey of services.
Central bank meetings in the UK, Australia, India, Russia, and Thailand will also be in the spotlight, with the Bank of England under particular scrutiny after recent fears about recovery prospects (fears shared across the globe).
In Australia, the RBA is expected to leave monetary policy on hold for the fifth month in a row at its meeting tomorrow and will release its quarterly Statement on Monetary Policy on Friday.
The RBA is still in “watch and wait” mode, and the policy focus now remains largely on fiscal policy. Its key rate is going to remain at 0.25% for three years at least, judging by the weakness in employment and inflation.
The RBA is unlikely to make any major changes to its economic growth forecasts but it may lower its underlying inflation forecasts given June quarter underlying inflation came in lower than it expected last week and it will continue to emphasise the uncertainty surrounding the outlook.
On the data front, there’s the monthly CoreLogic house price data for July out today (a big fall?), another solid trade surplus for June (and the June quarter), a rise in retail sales for the month, but a fall in the quarter and housing finance figures for June as well.
Car sales figures will be issued midweek for July. And the June 30 reporting season continues to grow (slowly) in the coming week.
In the US Friday’s jobs data for July are forecast to show the return of another 1.6 million payrolls jobs and unemployment to fall to 10.5%.
But the AMP’s Dr. Shane Oliver cautions that the “renewed weakness in jobless claims on the back of the resurgence in coronavirus cases raising the risk of disappointment.”
US data releases will see the July manufacturing conditions survey out tonight and service sector conditions on Wednesday.
US June quarter earnings results will continue to flow (see separate story). Car sales figures for last month will be out today and tomorrow.
In China, the Caixin manufacturing PMI today is expected to hold around 51.2 (close to the reading from the official survey on Friday) and Friday’s July trade data is expected to show a further recovery in import growth but softness in exports.
