Nädal ees – hirm naaseb enne inflatsiooniandmeid

Can the Fed afford to ease off the brake?

The end of last week was a bit of a reality check for investors that were maybe getting a little carried away with the supposed “dovish pivot” from the Fed and turning a blind eye to the data and what central bank policymakers were saying.

Perhaps the experience of the last 12 months can explain the latter but there’s no ignoring the data that we saw on Friday. The US economy is certainly not behaving like it’s in a recession; rather the labour market is so hot that the Fed may not be able to slow down as hoped.

While the UK is preparing for a long period of stagflation, the US is desperately trying to avoid a hard landing. The inflation data next week may shed further light on whether the Fed can afford to ease off the brake in September or possibly even be forced to slam on harder.

CPI eyed following a hot jobs report

GDP in focus after dire BoE forecasts

What next for USDJPY?

US

It is all about inflation this week.  Now that some Fed members have pushed back on the idea of a Fed pivot, investors will want to see if inflation continues to show signs that inflation has peaked. The US economy might be slowing down and that will lead to some demand destruction for goods. 

The July inflation report is expected to show a much slower pace of price pressure, but if it ends up being a hot report, expectations for the September FOMC meeting could swing further to a 75 basis point rate increase.  The month-over-month reading is expected to show a 0.2% increase, down from the 1.3% pace in the prior month.  The headline year-over-year reading is expected to ease from 9.1% to 8.8%.       

The other important data set for the week is the preliminary University of Michigan consumer sentiment report, which is expected to stabilize.  

Traders will also pay close attention to a few Fed appearances during the week from Evans, Kashkari, and Daly. Leading up to the September policy decision, traders will want to know how many Fed members are positioning themselves for a slower pace of tightening policy.    

Election season continues with US primary elections in Connecticut, Minnesota, Vermont, and Wisconsin.  

EU 

Next week is looking a little quiet on the European front, with final inflation data the only notable release. Of course, it will attract plenty of attention considering the level of central bank activity at the moment but revisions do tend to be less impactful.

With the winter already in mind, the focus will remain on Russian gas flows as Nord Stream 1 continues to run at 20%.
UK 

GDP data on Friday is the standout next week, especially in light of the bleak BoE forecasts on Thursday. The country may not be in a recession yet but the central bank thinks it will very soon and the slump will be long and painful. If the GDP data on Friday is unexpectedly negative, it will compound the misery facing the country over the next couple of years.

Venemaa

Inflation and GDP data is released next week with the former seen falling to 15.3%, allowing for further rate cuts from the CBR as it seeks to address the strength of the rouble and support the economy.

Lõuna-Aafrika

Only tier three data releases next week, with manufacturing, mining and gold production among them.

Türgi

A selection of economic data is due next week from unemployment to industrial production and the current account. Inflation jumped to 79.6% last month, further highlighting the failure of the monetary policy experiment. We could get more evidence next week but ultimately, it won’t make a difference.

Šveits

Inflation hit 3.4% last month, further increasing the odds of a 50 basis point hike from the SNB next month. The central bank does like to surprise markets so an inter-meeting move is possible. Next up is unemployment data on Monday.

Hiina

China releases its trade balance data over the weekend, but it should have little market impact on Monday. China CPI will be released on Wednesday with inflation expectations universally benign at 2.50% YoY. The risk is that the inflation story starts to catch up with China, where growth is muted. 

The Pelosi/Taiwan visit is not expected to have a long-lasting impact on local markets, which were already pricing it out on Friday. Developments in China’s property developer sector, real estate bad loans, and covid zero continue to present the main headline risk to China.

India

The RBI hiked by 0.50% on Friday, higher than expected, with a hawkish tone to the statement. The INR did not respond positively, nor has it to lower oil prices. A strong jobs report hasn’t helped and a higher inflation number from the US next week could see it test record lows against the US dollar above 80.00. That could also restart foreign investor outflows from the Sensex once again, which has recovered over the past two weeks.

Austraalia 

AUD/USD remains at the mercy of international investor flows as a global sentiment gauge. AUD has staged a major technical breakout higher but gains have been limited by AUD/JPY due to the USD/JPY collapse. 

Consumer and business sentiment on Monday are the only releases of note this week. Australian equities continue to track the Nasdaq and S&P 500.

Uus-Meremaa

NZD/USD remains at the mercy of international investor flows as a global sentiment gauge. NZD has staged a major technical breakout higher but gains have been limited by NZD/JPY due to the USD/JPY collapse. 

NZ electronic card spending on Tuesday, and business PMI and food inflation on Friday, are closely watched data points for NZ. Higher spending and food inflation will reinforce the view that more aggressive RBNZ tightening is on the way. Could be a short-term negative for local equities and a short-term positive for the currency.
Jaapan

The USD/JPY collapse extended to 130.50, just shy of 130.00. It is attempting to form a base at these levels but its direction remains entirely dependent on the US/Japan interest rate differential. Hawkish comments from FOMC members over the past week have lifted USD/JPY back to 132.00 while the jobs report gave it another kick higher.

Japan has a heavy week of data releases, but all are tier-2 and unlikely to have a big impact on the markets. The Nikkei continues to closely track the Nasdaq.

Singapur

Singapore retail sales were soft this past week, easing MAS tightening fears in October. That should take the edge off Singapore’s GDP this Thursday and if that data is soft, SGD weakness could well resume. A hawkish MAS has meant SGD has outperformed in the Asia FX space.

Singapore earnings have been firm for Q2 supporting equity prices.

Majandus Kalender

Laupäev, august. 6

Majandussündmused

US Secretary of State Blinken visits the Philippines

Berkshire Hathaway Inc. quarterly earnings are released

Pühapäev, august 7

Majandusandmed/sündmused

China trade, forex reserves

US Secretary of State Blinken travels to Africa 

Esmaspäev, 8. august

Majandusandmed/sündmused

Austraalia välisreservid

Singapuri välisreservid

Jaapani maksebilanss

New Zealand 2-yr inflation expectation

Iran Nuclear Deal talks to continue in Vienna

Teisipäev, 9. august

Majandusandmed/sündmused

US NFIB small business optimism, nonfarm productivity

US primary elections are held in Connecticut, Minnesota, Vermont and Wisconsin

Australia NAB business confidence, household spending

Hiina kogufinantseerimine, rahapakkumine, uued jüaani laenud

Jaapani M2 rahavaru, tööpinkide tellimused

Mexico CPI, international reserves

Uus-Meremaa tiheda liikluse indeks, kaardikulutused

Philippines GDP, trade, unemployment

Tai tarbijate usaldus

Parties are vying to fill the 1st District seat left vacant by the death of Republican Representative Jim Hagedorn

Kolmapäev, 10. august

Majandusandmed/sündmused

US July CPI M/M: 0.2%e v 1.3% prior; Y/Y: 8.8%e v 9.1% prior, wholesale inventories

Saksamaa THI

Venemaa THI 

Austraalia tarbijate usaldus

Hiina PPI

Jaapani PPI

Tai määra otsus

Chicago Fed President Evans talks about the economy and monetary policy

Minneapolis Fed President Kashkari speaks on stagflation 

Chinese Ambassador to Australia Xiao Qian speaks at Australia’s National Press Club

KMH toornafta varude aruanne

Neljapäev, 11. august

Majandusandmed/sündmused

USA PPI, esialgsed töötustaotlused

Argentina CPI

Austraalia tarbijate inflatsiooniootused

Hiina FDI

Iisraeli kaubandus

Mexico (Banxico) rate decision: Expected to raise Overnight Rate by 75bps to 8.50%

Mehhiko tööstustoodang

Uus-Meremaa kodude müük, netoränne

Peruu määra otsus

Singapuri SKP

Lõuna-Aafrika tootmine

Lõuna-Korea rahapakkumine

Tai välisreservid

Türgi arvelduskonto

San Francisco Fed President Daly is interviewed on Bloomberg TV

UK Tory Party leadership holds hustings in Cheltenham

Denmark’s government holds Ukraine conference   

Reede, 12. august

Majandusandmed/sündmused

USA Michigani ülikooli tarbijate meeleolud

Hispaania THI

Poola THI

India THI 

Ühendkuningriigi SKP

Venemaa SKP 

Hiina keskmise tähtajaga laenud

Euroala tööstustoodang

Prantsusmaa töötus, THI

India industrial production, trade

Itaalia kaubandus

Uus-Meremaa toiduhinnad, PMI

Türgi tööstustoodang

UK GDP industrial production

EasyJet Plc pilots are set to strike in Spain

Riigireitingute värskendused

Taani (Fitch)

Ungari (S&P) 

Šveits (S&P)

Taani (Moody's)

Saksamaa (Moody's)

Belgia (DBRS)

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