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Weekly Market Outlook: US Data & RBA Decision

Sep 30 2019, 06:52 PM (+06) |

It is going to be a busy week as investors look to a new month.

Two key events will stand out: the RBA’s interest rate decision and the economic data from the United States.

We are also expecting monthly PMI reports across various developed economies. These will show us how the global manufacturing and services sectors are doing.

With concerns of a slowdown, the data over the week will give preliminary insights into some of the key economies. This, in turn, will no doubt become the driving factor for monetary policy decisions.

Here’s a brief look at the key economic events coming up for the week ahead.

USD Looks to a Busy Week Ahead

The central bank has cut rates twice already this year. Investors are penciling in a < 2% GDP growth rate for the three months ending September.

As a result, the data this week will give a preliminary view of the US economy.

ISM’s Manufacturing & Services Activity to Slow

The Institute for Supply Management (ISM) will be releasing its monthly manufacturing and non-manufacturing index. Economists expect to see a slower pace of activity on both counts.

The ISM manufacturing PMI fell below the 50-index last month in August. However, for September, economists are optimistic that activity will pick up and rebound.

The consensus estimates point to manufacturing activity rising to 50.4, after falling to 49.1 in August. But is this the start of a pickup in activity or just a small rebound?

The services sector activity on the other is expected to ease from 56.4 in August to 55.1 in September. This marks a slowdown even in the services sector which has managed to buck the trend so far.

Payrolls Report Could Give More Insights.. or Maybe Not!

The US payrolls data comes with the ADP’s private payrolls report on Wednesday. Private hiring is forecast to show 140k in September, following 195k headline print in August.

Friday’s payrolls report will, of course, steal the limelight. The US unemployment rate is set to hold steady at 3.7%. The monthly payrolls are forecast to rise by 140k, slightly higher from August’s 130k.

Wage growth is forecast to slow to a pace of 0.3% after rising 0.4% the month before.

RBA to Cut Rates

A busy week from Australia will see various economic reports as well as the monetary policy meeting from the RBA. The central bank will be following its peers into maintaining a dovish monetary policy cycle.

Economic Data to Take a Backseat

On the economic front, this week will see the building approvals data coming out on Tuesday. Forecasts point to a 2.1% increase in building approvals. This follows a massive 9.1% decline earlier.

Later in the week, the retail sales report is due on Friday. Australia’s retail sales are forecast to rise by 0.5% on the month. This marks a modest pickup after retail sales fell 0.1% earlier.

RBA set to Continue With its Easing Bias

The RBA is due to meet on Tuesday and is set to cut the cash rate from the current 1.00% to 0.75%.

This marks a rate cut that would push Australia’s interest rates to new historic lows. Recent declines in the labor market and sluggish inflation growth continue to plague policymakers.

UK PMI’s to Continue Easing

For the UK markets, it will be an interesting week. The Brexit deadline of October 31st looms even closer. With still no deal in sight, investors will be looking to see how the economy has fared.

IHS Markit will be releasing the monthly PMI reports for the UK.  The manufacturing, construction and services PMI numbers will remain subdued.

The report will highlight the toll that the Brexit uncertainty is taking on UK businesses.

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