With the Fed’s July policy meeting out of the way, focus will turn next week on the Bank of England, Bank of Japan and the Reserve Bank of Australia, which hold their scheduled monetary policy meetings. US employment numbers will also be closely eyed in addition to personal spending data.
Starting the week, will be the Markit final manufacturing PMI for China, Japan and the Eurozone for July, as well as the main release for the UK. China’s final PMI is expected to show a slightly higher reading of 48.3, versus 48.2 previously, but no revision is expected for the Eurozone. UK manufacturing PMI is estimated to have improved to 51.6 in July from 51.4 in June. More manufacturing survey is due in the form of the ISM manufacturing index for the US. But investors are likely to be more interested in the personal spending and personal consumption expenditure (PCE) price index data for the US. Annual core PCE is estimated to stay stable at 1.2% for the third month but a higher reading on Monday could signal rising price pressures which would worry the Fed.
On Tuesday, Australian retail sales and trade balance figures for June will be released just ahead of the rate decision by the Reserve Bank of Australia. The RBA is expected to keep its cash rate unchanged at 2% but further cuts are expected later in the year. With China’s economy still stuck in a soft patch, the RBA is worried that the aussie’s dramatic depreciation to date against the dollar won’t be enough to boost non-commodity exports. Also due on Tuesday is the construction PMI for the UK, which is forecast to rise to 58.4 in July from 58.1.
More PMI data is expected on Wednesday as the final composite and services PMI numbers are out for the Eurozone. UK services PMI is also due, with services activity forecast to have slowed slightly to 58.0. New Zealand’s unemployment rate is estimated to rise by 0.1% to 5.9% in the second quarter. While in the US, June trade balance figures are out alongside the ADP employment change and ISM non-manufacturing composite index.
Thursday will be dominated by UK data as industrial production and manufacturing figures are published. June industrial production in the UK is forecast to rise by 0.1% but manufacturing should see slightly faster growth of 0.2% on the month. The main focus though will be on the Bank of England’s quarterly inflation report and the MPC meeting minutes. No change in policy is expected in August but the BoE is for the first time publishing the minutes on the same day as its meeting. This will be followed by a press conference, where investors are likely to look for more clues on how soon the BoE will raise interest rates. Also due on Thursday are German June factory orders and Australian jobs data.
The Bank of Japan will announce on Friday its latest meeting decision. It’s expected to keep monetary policy unchanged as Japanese manufacturers benefit from a weak yen but further easing later in the year cannot be ruled out as inflation continues to undershoot the target. The UK and Germany will see the release of trade figures for June but the highlight for the end of the week will be US monthly jobs numbers. Nonfarm payrolls for July are expected to come in at 225k, versus 223k in June, while the unemployment rate is forecast to stay unchanged at 5.3%. Average hourly earnings are estimated to have picked up to 2.3% in July. If the jobs data comes in stronger, it is likely to fuel expectations of a September rate rise. Lastly, Canadian jobs figures are also out the same day, with the unemployment rate forecast to stay at 6.8% in July.