September 23, 2019
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.
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.
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
JPY – BOJ Core CPI
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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