On Monday 4th: Germany’s Trade Balance is due.
On Tuesday 5th: The RBA meets on Monetary Policy
On Wednesday 6th: Australia releases its GDP data, the BoC meets on Monetary Policy, and the US publishes its Trade Balance and ISM Services PMI.
On Thursday 7th: The Australian and Chinese Trade Balances are due, along with EU GDP, the Canadian Ivey PMI and Japan’s GDP figures.
On Friday 8th: Canada releases its Employment data.
Weekly outlook
Earnings season has all but wrapped up again after last week, and we turn our attention this week to the goings-on in Australian and Canadian Monetary Policy among other new economic data.
Despite a general reduction in inflation, which has boosted hopes that the Reserve Bank of Australia (RBA) would not increase interest rates again, rents, insurance premiums, and power costs are all rising rapidly.
As the price pressures for food and non-essential products eased due to decreased consumer demand, the Australian Bureau of Statistics said on Wednesday that annual inflation had fallen to 4.9% in July, from 5.4% in June. As a result of this number being lower than experts' predictions of 5.2%, the market now expects the RBA board to maintain the cash rate at 4.1% during the last meeting of departing governor Philip Lowe next Tuesday.
Canada is also bracing itself for another Monetary Policy Meeting this week. The majority of economists in a Reuters poll predict the Bank of Canada (BoC) to keep its benchmark interest rate at 5.00% on September 6th and maintain that level until at least the end of March 2024, with a small but rising minority anticipating one more rate hike this year.
Monday 4th of September
Germany's trade surplus increased from an upwardly revised €14.6 billion in May to €18.7 billion in June, well above market expectations of €15 billion. Exports increased by 0.1% to €131.3 billion while imports fell by 3.4% to €112.6 billion, creating the largest surplus since January 2021. When the most recent report is due at 6:00 AM GMT, analysts expect this figure to grow further to around €19.1 billion.
Tuesday 5th of September
The Reserve Bank of Australia defied market expectations and maintained its cash rate the same at 4.1% at its monetary policy meeting in August, prolonging the rate pause for a second month running. Despite pointing out that the country's cost pressures are falling, the central bank suggested that the inflation rate at the time was still too high and that it may further intervene later if necessary. The most recent monthly CPI indicator on August 30th revealed that the headline inflation rate had decreased to 4.9%, and economists expect the bank may keep interest rates unchanged at this month's meeting with the result statement released at 4:30 AM GMT.
Wednesday 6th of September
Again in Australia, GDP figures are due at 1:30 AM GMT today. The economy increased 0.2% year on year in Q1 2023, after an upwardly revised 0.6% increase in Q4 last year. This was the sixth straight period of economic expansion, although it was the slowest in the series. Quarter over quarter growth of around 0.2% is expected again from the new data, while an annualized 1.5% growth is also forecast.
The Bank of Canada is due to meet on monetary policy this week, with its statement published at 2:00 PM GMT today. The BoC increased the target for its overnight rate by 25 basis points to 5% in July, underpinning the unexpected 25 basis point rate increase from the previous meeting and extending its tightening cycle after a brief halt in March and April. The Governing Council of the central bank stated that stronger-than-anticipated consumption and persistently constrained labor markets drove stubborn inflationary pressures for services, necessitating another increase in borrowing costs. Economists feel that rates may be kept on hold at this meeting, but another rise may also happen later on this year.
The U.S. trade deficit shrunk significantly to USD $65.50 billion in June as firms reduced their purchases of capital goods manufactured abroad, driving imports to their lowest level in more than 1-1/2 years. When the newest data is released at 12:30 PM GMT, the deficit is expected to increase slightly again to around USD $65.8 billion.
The US publishes its ISM Services PMI from 2:00 PM GMT on Wednesday. From a four-month high of 53.9 in June, the index dropped to 52.7 in July, suggesting that development in services was slowing as a result of moderate expansion in manufacturing and commerce. A small drop is tipped for August down to 52.6.
Thursday 7th of September
Australia's trade balance is due to be released at 1:30 AM GMT today. The surplus increased from a downwardly revised AUD $10.49 billion in May to a three-month high of AUD $11.32 billion in June. A drop to AUD $10.5 billion is forecast for July.
China's trade balance, which is due at 3:00 AM GMT, recorded a decrease in the surplus in July to USD $80.6 billion from USD $102.7 billion in the same time the previous year. August data is expected to show the surplus growing again to around USD $81 billion.
In keeping with a preliminary estimate, the Eurozone is anticipated to confirm today that the economy expanded by 0.6% year over year in the second quarter of 2023, slowing from a 1.1% increase in the prior quarter. Due to a significant decline in real earnings and rising interest rates, it was the slowest rate of growth since 2020–21. 0.3% quarter over quarter growth is also forecast from the data due at 9:00 AM GMT.
In Canada, the Ivey Purchasing Managers Index dropped to 48.6 in July from 50.2 the month before, which was below the 52.7 number that was predicted by the market. After six straight months of growth, the most recent estimate indicated that Canadian economic activity had contracted as the rate of job creation slowed. The August figures are due to be published at 2:00 PM GMT.
Preliminary data from Japan is expected to be confirmed today and reveal that the Japanese economy expanded by 6.0% annually in the second quarter of 2023, much higher than the 3.7% growth seen in the first quarter. The annual rate of growth seems to have accelerated for a third consecutive quarter, and it is forecast to be the fastest growth since the fourth quarter of 2020. Q2 GDP is due for release at 11:50 PM GMT.
Friday 8th of September
A range of Canadian employment figures are set to be released today from 12:30 PM GMT, including the Unemployment and Participation Rates and Employment Changes. In line with market predictions, the Unemployment Rate in Canada increased somewhat to 5.5% in July from 5.4% the previous month. This was the third straight increase, reflecting some weakening in the Canadian labor market. However, the number was still much below pre-pandemic levels and is expected to remain there this week, so there is still a chance that the BoC may hike interest rates in September.
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