September 23, 2019

Market Outlook

The S&P 500 dropped 0.5% on Friday, US interest rates fall and Australian factory activity contracts in the month of September to 49.4 signaling the first monthly contraction since the survey began in May 2016. Australian employment figures also fell for the first time since May.

Week Ahead

Key economic releases from across the globe this week include: Australia: It’s light on the economic docket this week in Australia. Flash Manufacturing and flash services PMI feature on Monday with RBA Governor Lowe speaking on Tuesday; US: Quarter 2 GDP growth, personal income and outlays, PCE price index, durable goods orders, and pending home sales; UK: Governor Carney of the BOE will be speaking along with MPC members Tenreyro and Saunders. Public sector net borrowing and CBI factory orders are also revealed; Eurozone: ECB President Draghi speaks, the Eurozone business survey and monetary indicators are revealed along with Germany consumer morale; Rest of the World: The Bank of Japan will release the minutes of its last monetary policy meeting and the Reserve Bank of New Zealand will deliver its latest monetary policy decision on Wednesday.


A mixed beginning to the week for AUD as data released showed a fall in factory activity but a rise in both services and business activity. Both latter readings posted an above 50 reading signaling contraction in the region boosting AUD early on in trading. The ASX 200 is also trading at a seven-week high currently. Aussie-US fell to three-week lows on Friday amidst growing trade war tensions between the US and China. The Australian dollar and the global share markets ‘copped’ most of the pressure with AUD recent gains reversing and the S&P 500 falling 0.5% on the day. The latest trade war concerns have come about due to Chinese officials cancelling several agricultural visits in America. RBA Governor Lowe will be speaking ahead of the RBA’s meeting next week and is expected to highlight the Central Bank’s plans for further rate cuts. Markets are currently pricing in an 80% chance of a rate cut come October 1st.


Data last week from the US featured a better than expected Philly Fed manufacturing index reading which printed at 12.0 beating the proposed 10.9 number. The Fed Reserve cut interest rates in the latest twist in monetary policy to support weaker global growth and the US Dollar rebounded higher on Wednesday as some investors were hoping for further rate cut signals by policymakers which failed to materialise. Key economic releases this week out of the US include service and manufacturing PMI readings, crude oil inventories, final GDP, and unemployment claims. Several FOMC members will feature all of which have the potential to move markets.


In the UK retail sales fell 0.2% in August in line with market expectations. The BOE left interest rates unchanged at 0.75% as expected but warned that Brexit uncertainty is causing the economy to slow, damaging productivity and business investment. The BOE did acknowledge that if the UK exits the EU smoothly then it would consider its long-term view of raising interest rates which would boost the pound. However, the risk of a no-deal Brexit persists even though European Commission President Jean Claude Juncker’s words last week impacted the Pound significantly when he announced that he thinks a Brexit deal can be reached by October 31st. He stated, “I think we can have a deal. I am doing everything to have a deal because I don’t like the idea of a no-deal because I think this would have catastrophic consequences for at least one year.” The Supreme court judgements on the prorogation of Parliament are due this week either Monday or Tuesday and it will be interesting to see how the Pound if affect by this ruling and if this will have a damaging effect on PM Boris Johnson’s position as leader.


The Aussie dollar fell marginally against the Euro last week down 0.1%. ECB governing council member Rehn stated that recent data pointed to a muted inflation outlook for a long time in the Eurozone. Key European data out this week includes the German IFO Business Climate, German manufacturing and services PMI and ECB President Mario Draghi will be speaking. His address has the potential to move the market.

Rest of the World

The Kiwi-dollar hit a fresh four-week low on Friday, Hong Kong August inflation rises to a three-year high, and China’s one-year loan prime rate is set at 4.2%in September down from 4.25% in the previous month. Stocks in the Eurozone hit fifteen-month high and monthly retail sales out of Canada rose 0.4% in the month of July.

Event Wrap


AUD – Flash Manufacturing PMI

AUD – Flash Services PMI

JPY – Bank Holiday

CNY – CB Leading Index

EUR – German Flash Manufacturing PMI

EUR – German Flash Services PMI

EUR – ECB Draghi Speaks

GBP – MPC Member Tenreyro

USD – Flash Manufacturing PMI

USD – Flash Service PMI

USD – FOMC Member Williams Speaks


AUD – RBA Governor Lowe Speaks

USD – FOMC Member Bullard Speaks

JPY – BOJ Kuroda Speaks

EUR – German IFO Business Climate

GBP – Public Sector Net Borrowing


NZD –Trade Balance

NZD – Official Cash Rate

NZD – RBNZ Rate Statement

JPY – Monetary Policy Meeting Minutes


EUR – German GFK Consumer Climate

USD – FOMC Member Evans Speaks


USD – FOMC Member George Speaks

USD – New Home Sales

USD – Crude Oil Inventories

USD – Final GDP

USD – Goods Trade Balance

USD – Unemployment Claims

EUR – ECB Economic Bulletin

EUR – ECB president Draghi Speaks

GBP – BOE Governor Carney Speaks


USD – FOMC Member Bullard Speaks

USD – Pending Home Sales

USD – FOMC Press Conference

USD – FOMC Member Clarida Speaks

USD – Core Durable Goods Orders

USD – Personal Spending

USD – FOMC Member Quarles Speaks

USD – Personal Income

GBP – GFK Consumer Confidence

GBP – MPC Member Saunders Speaks



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