The Week Ahead – Fed Minutes, the RBNZ, and the RBA in Focus

On the Macro

It’s a big week ahead on the economic calendar. US retail sales, economic indicators from China and the UK, and central banks will keep the markets busy in mid-August.

For the Dollar:

It is another tricky week ahead for the US Dollar. On Tuesday, retail sales figures will affect sentiment toward the US economy and the September Fed interest rate decision.

After the softer-than-expected, but sticky, consumer inflation numbers, weak retail sales figures could close the door on a September hike. However, investors will slice and dice the FOMC meeting minutes on Wednesday to understand the influence of the latest stats on the Fed.

On Thursday, the US jobless claims will need to creep higher to support a more dovish FED outlook.

Other stats include NY State manufacturing and housing sector-related numbers that should have a limited impact.

For the EUR:

It’s a busier week for the EUR. On Tuesday, ZEW Economic Sentiment figures for Germany and the Eurozone will draw interest. A sharp fall in sentiment toward the German economy would test buyer appetite.

However, Eurozone GDP numbers will draw interest on Wednesday ahead of trade data and inflation figures on Thursday and Friday.

With the Eurozone economy in the spotlight, the GDP and inflation numbers will likely have more impact.

For the Pound:

It is a busy week for the Pound. On Tuesday, wage growth, claimant counts, and the UK unemployment rate will move the dial. Wage growth remains a bugbear for the Bank of England. A pickup in wage growth and a steady unemployment rate would fuel hawkish BoE policy bets.

However, UK inflation numbers on Wednesday and Retail sales figures on Friday have to support the hawkish bets for the GBP to USD to avoid a tumble.

With the economic calendar on the busy side, investors should track BoE chatter throughout the week. No MPC members are on the calendar to speak, leaving BoE chatter with the media to influence.

For the Loonie:

It is a busier week for the Loonie. Inflation numbers for July will move the dial on Tuesday. Hotter-than-expected numbers could push the Bank of Canada into a corner.

Other stats include wholesale sales, housing starts, and RMPI numbers that should have a limited impact on the Loonie.

Out of Asia

For the Aussie Dollar:

It is a relatively quiet week ahead for the Aussie Dollar. Wage growth figures for the second quarter will draw interest ahead of employment numbers on Thursday. Both reports will influence sentiment toward RBA monetary policy goals.

From Tuesday, the RBA meeting minutes will also need consideration after the surprise hold this month.

For the Kiwi Dollar:

It’s an important week for the Kiwi Dollar. Producer price figures for Q2 will draw interest on Thursday. However, the impact of the numbers on the Kiwi Dollar will hinge on the RBNZ.

On Wednesday, the RBNZ delivers its August interest rate decision. Economists expect the RBNZ to leave the cash rate at 5.50%. It wouldn’t be the first time the RBNZ catches the markets by surprise.

For the Japanese Yen:

It is a busy week for the Japanese Yen. Q2 GDP and industrial production figures kick start the week on Tuesday. The markets are looking for reasons for the Bank of Japan to move away from ultra-loose. GDP numbers would need to come in hot to shift sentiment.

On Thursday, trade data will also influence ahead of inflation figures for July on Friday. The Friday numbers could also influence BoJ monetary policy expectations.

Out of China

It is another busy week ahead. Industrial production, retail sales, fixed asset investment, and unemployment numbers will be in focus on Tuesday.

After disappointing trade and inflation numbers from last week, the numbers will influence market risk sentiment.