Get ready for an action-packed week in the markets, as several key economic events are lined up to keep traders on their toes. Here’s a breakdown of what to watch for:
Monday: Kicking off the week, we’ll dive into the S&P Global Manufacturing and Services PMI (Purchasing Managers’ Index) data for the Eurozone, UK, and US. These indicators will give us insight into the health of business activity across these major economies. Markets will be scanning the figures for any signs of economic slowdown or growth acceleration, which could shift expectations around monetary policy.
Tuesday: All eyes turn to the Reserve Bank of Australia (RBA), which is largely expected to keep interest rates unchanged. Investors have priced in a 93% chance that the RBA holds steady, leaving a slim 7% possibility of a rate cut. The market will dissect the RBA’s commentary for clues on future policy shifts.
Wednesday: Australia’s CPI (Consumer Price Index) will take center stage, with inflation projected to cool to 2.7% in August from 3.3% in July. This would push inflation back into the RBA’s target range of 2-3%, providing some much-needed relief to policymakers. Markets are currently not expecting any rate cuts until February 2024, so any surprises in the data could shake up those forecasts.
Thursday: Things heat up as the Swiss National Bank (SNB) enters the fray. With inflation pressures cooling, there’s a good chance the SNB could lower its policy rate. But the million-dollar question is: by how much? Analysts are split between a 25bps or 50bps cut, and the decision will likely influence the Swiss franc’s (CHF) trajectory. A rate cut could weaken the CHF, which has been rallying for four consecutive months against both the USD and euro, potentially easing some of the strain on Switzerland’s export-heavy economy.
In the US, we’ll also get the final Q2 GDP print, alongside jobless claims and durable goods orders. Any surprises here could sway market sentiment ahead of the all-important PCE inflation data later in the week.
Friday: The climax of the week comes with the release of the US PCE Price Index—the Federal Reserve’s preferred inflation gauge. Economists expect YoY PCE inflation to drop to 2.3% in August from 2.5% in July, while core PCE is forecast to rise slightly to 2.7%. This data will be crucial for gauging the Fed’s next move, as it has already revised down its PCE inflation projections for 2024.
Currency Watch: The AUD/USD pair has been under mild pressure, trading near 0.6805 as the market reacts to a mixed bag of economic data. Aussie employment numbers came in strong, with 47.5K jobs added in August, but the weaker Australian dollar continues to present challenges for the currency pair. Traders will be keeping a close eye on US PMI data on Monday and Friday’s PCE report for fresh momentum.
In short, it’s going to be a volatile week filled with key economic indicators and central bank action. Whether you’re tracking inflation, employment data, or central bank rate decisions, there’s plenty to keep you engaged in the markets! Stay sharp.
