The US dollar was on the back foot across the board in the last full week of August. An update on US GDP, consumer confidence, and the all-important Non-Farm Payrolls stand out. Here are the highlights for the upcoming week.
Yellen did not talk about monetary policy in her Jackson Hole speech and this sent the dollar tumbling down. Sales of US new homes and also existing ones fell short of expectations, but these were not disasters. Yet together with the ongoing troubles of President Trump, the dollar lost some ground. In Europe, business surveys were mixed, but PMIs were mostly positive. British GDP was confirmed at low levels and did not help the pound. EUR/GBP reached the highest levels since 2009. The Aussie and the loonie advanced against the dollar. Will volatility pick up now? Let’s start:
- CB Consumer Confidence: Tuesday, 14:00. The Conference Board’s consumer confidence measure surprised in July by rising to 121.1 points. A bump up in confidence was also seen in the parallel report by the University of Michigan’s figures. Will we see another rise this time? A score of 120.3 is on the cards now.
- ADP Non-Farm Payrolls: Wednesday, 12:15. Payrolls software provider ADP publishes its jobs report for the private sector and always influences markets. The figures released do not always correlate with the official report by the BLS, but they are still eyed. A gain of 178K was seen in July. A similar gain of 186K is projected.
- US GDP (second release): Wednesday, 12:30. The US economy came back to the “new normal” levels of growth in Q2: 2.6% according to the first release. We now get the second estimate for this quarter. Q1 2017 and 2016 did not experience upbeat growth, to say the least: under 2%. A small upgrade to 2.7% is expected in the second release.
- Euro-zone CPI: Thursday, 9:00. After ECB President Mario Draghi spoke out in Jackson Hole, he will get an important data point. In July, headline inflation stood at 1.3%, as expected, but core CPI bounced back to 1.2%, an encouraging figure. We now receive the preliminary numbers for August. CPI is predicted to rise to 1.4% y/y while core CPI is expected to remain unchanged.
- Canadian GDP: Thursday, 12:30. Canada experienced robust growth so far in 2017. Canada’s unique publication of GDP data on a monthly basis provides an up to date snapshot of the economy. The publication now, for the month of June, concludes the second quarter, so we will also receive quarterly numbers. Back in May, the economy enjoyed a robust growth rate of 0.6%. A slower growth rate of 0.1% is on the cards now.
- US Core PCE: Thursday, 12:30. The Core PCE Price Index is the Fed’s favorite measure of inflation, even though it lags the publication of CPI numbers. After core CPI remained unchanged at 1.7% y/y, the core PCE number will likely stand at 1.4% y/y. A rise of 0.1% is on the cards. Note that the report also includes personal spending and personal income.
- US Pending Home Sales: Thursday, 14:00. The level of sales pending the closing transaction have risen by 1.5% in June. We will now get the figures for July. The report has had little impact earlier in the year but seems to have a growing impact in recent months. A gain of 0.6% is likely.
- Chinese Caixin Manufacturing PMI: Friday, 1:45. China is the second-largest economy in the world, and its growth has a wide impact on the whole world. Caixin provides an independent view of the economy via its forward looking indicator. In July, the indicator beat expectations with 51.1 points. A minor tick down to 51 is forecast.
- US Non-Farm Payrolls: Friday, 12:30. It is the first Friday of the month and also the first day of the month. This means that the ISM PMIs are not available yet. With fewer hints, we could get a more volatile reaction. The Federal Reserve is set to begin reducing the balance sheet in its September meeting and the outcome of the report will not change it. Nevertheless, the fate of the next rate hikes is unknown. Back in June, the economy gained 209K jobs and wages rose by 0.3% m/m and 2.5% y/y. While this was in line with previous reports, there is no wage pressure. Will we see it now? Expectations stand at a gain of 180K jobs and no change of the unemployment rate, which stood at 4.3%. Wages are expected to rise by 0.2% m/m.
- US ISM Manufacturing PMI: Friday, 14:00. Despite being released after the NFP, the state of the manufacturing sector is still of interest. An encouraging score of 56.3 was seen in June. A similar figure is likely now. A small rise to 56.5 is expected.