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Newsquawk Week Ahead: Highlights Include RBA, BoC, US ISM Services PMI and China Trade

  • Mon: Labor Day in the United States and Canada; German trade (July), Swiss GDP (Q2), EZ Sentix (September)
  • Mar: RBA Policy Announcement; Composite and Final Services PMI (August), Eurozone Producer Prices (July), US Factory Orders (July)
  • Marry: BoC policy announcement; German Industrial Orders (July), Eurozone and UK Construction PMI (August), US ISM Services PMI (August), Canadian Trade Balance (July
  • Game: Chinese trade balance (August), Swiss unemployment (August), German industrial production (July), final employment and revised GDP in the euro zone (Q2), American CMI (week of August 28)
  • Fri: Japan Revised GDP (Q2), German Final CPI (August), Canadian Labor Market Report (August)

NOTE: Previews are listed in daily order.

RBA announcement (Tuesday): The RBA is expected to keep its target rate at 4.10% at its September meeting, a view reinforced by 24 of 29 people polled via Reuters. The consensus is also supported by market prices (ASX 30-Day Interbank Cash Rate Futures) which show an 86% chance of a hold and only a 14% chance of a 25 basis point rate hike. The data was also in line with the trend, with Australia’s CPI for July posting a decline of 5% to 4.9% from Exp. 5.2% (previous 5.4%), which has the effect of tilting prices a little more accommodating. Labor market indicators were also colder than expected – Unemployment rate printed at 3.7% vs. Exp. 3.6% (previous 3.5%) and employment at -14.6k vs. Exp. 15.0k (previous 32.6k). While a rate hold is widely expected, the RBA is unlikely to declare victory over inflation, but with a marked cooling in monthly numbers, it will be interesting to see if the Governor reiterates that “further tightening monetary policy might be necessary. “. ING analysts “expect the RBA to hold rates steady while looking for further signs that inflation is under control.”

BoC announcement (Wednesday): The consensus view is that the Bank of Canada will hold rates at 5.00%, according to a Reuters poll, and going forward, economists generally expect the Bank to hold rates at current levels until at the end of March 2024. Some still see risks that rates could rise. lifted, given that inflation rose more than expected in July, while the real estate market has recently shown some signs of recovery; a minority of respondents expect rates to rise by 25 basis points. However, analysts note that the Canadian economy is expected to slow as the impact of previous rate hikes continues to be felt, and that rising unemployment also gives the Bank of Canada room to maintain policy. Also, it might be safer for the central bank to wait until October to make policy changes, as it will have two more sets of jobs and inflation data to review before that meeting. .

US ISM Services PMI (Wednesday): Analysts expect the services ISM to be little changed in August, with consensus expecting 52.6 from 52.7, according to Refinitiv. For comparison, S&P Global’s flash PMI noted that U.S. services business activity fell to a six-month low of 51.0 in August (from 52.3 in July). , as high interest rates and inflationary pressures would have weighed on customer spending. “A near halt in business activity in August raises doubts about the strength of U.S. economic growth in the third quarter,” S&P Global wrote, “the survey shows that the acceleration in growth led by the services in the second quarter has faded”. S&P also said companies were warning that demand looked increasingly sluggish in the face of high prices and rising interest rates, adding that a decline in new orders received by companies in August could lead to a contraction in production in September, with companies adjusting their operating capacity in September. in line with the deteriorating demand environment. On inflation, S&P said that “increasing wage pressures as well as rising energy prices have meanwhile pushed input cost inflation higher, which will raise concerns about to the stickiness of consumer price inflation in the coming months,” but said one of the benefits was that “weak demand is starting to limit pricing power, which should help contain inflation around the 3% mark.

Chinese Trade Balance (Thursday): Chinese trade numbers will be watched closely for a diagnosis of external and domestic demand. Last month’s release paints a bleak picture of the health of China’s economy, with imports and exports falling faster than expected, the latter seeing the biggest decline since the outbreak of COVID-19 in February 2020. There are currently no expectations for next week. release. As for the July data, exports were printed at -14.5% vs exp. -12.5% ​​(Exp. -12.4%), while Imports came in at -12.4% against Expenses. -5.0% (previous -6.8%). Since then, China has launched a series of stimulus measures to help support domestic demand, alongside the unveiling of support for real estate and stock markets. The ING office suggests: “On the export side, weak global demand should continue to weigh heavily. For imports, domestic demand showed no significant signs of improvement, so it is also expected to remain weak.

OPEC+ (to be confirmed): Russia has announced that OPEC+ will unveil the “new main parameters” of the supply agreement next week. The next official meeting of the JMMC is scheduled for October 4 and the 36th ministerial meeting is scheduled for November 26, 2023, according to OPEC+ statements. Russian Deputy Prime Minister Novak, the country’s de facto oil chief, has said that Russia may extend its September export cut (300,000 BPD) until October. The bureaus also expect Saudi Arabia to further extend its voluntary $1m reduction in BPD support through October, with the Bloomberg poll suggesting that 20 out of 25 traders expect an extension of at least one more. month. Bloomberg also suggests that several OPEC delegates privately predicted an extension from Saudi Arabia. Earlier this month, Saudi Arabia warned it could extend and deepen cuts. That being said, it’s unclear what parameters might be revealed, nor is the timing of the announcement known at this point.

This article originally appeared on Newsquawk.


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