The central banks are now pretty much in holiday mode, except the RBNZ and FOMC. Yet, the data next week from the UK, Canada and US could clarify whether central banks will keep policy on a tightening path through year-end, and possibly beyond, or whether tightening forecasts will be cut. Across the Eurozone governments are very much preparing for energy shortages over the winter, and on both sides of the channel energy costs are likely to continue to rise in the coming months. The week ahead is expected to be another busy one, as inflation from the UK and Canada will dominate along with Retail Sales readings from across the globe.
Have a look at the most important events of the coming days in our usual weekly publication.
Monday – 15 August 2022
Tuesday – 16 August 2022
Average Earnings (GBP, GMT 06:00) – Average Earnings including bonus for June are expected to increase steady at 6.7% (3Mo/Yr). The ILO unemployment rate is seen unchanged at 3.8% since March.German ZEW (EUR, GMT 09:00) – The key topic for the Eurozone’s biggest and most important economy. Data is expected to show August’s ZEW economic sentiment contracting further at -56.9 from -53.8.Building Permits & Housing Starts (USD, GMT 12:30) – Housing starts are expected to rise 1.3% to a 1.580 mln pace in July from 1.559 mln in June. Permits are expected to tick up to 1.700 mln from 1.696 mln in June. Pending home sales plunged -8.6% in June to a 2-year low, after rising 0.4% in May. The MBA purchase index fell -8.9% in July to a 2-year low, before a likely August drop in the -0.7% area.Consumer Price Index and Core (CAD, GMT 12:30) – In July, the BoC surprised with a whopping 100 bp rate hike, bringing the policy rate to 2.50%. It also indicated more increases are needed. The reaction is in response to the run up in CPI to a 7.7% y/y pace in May, the hottest since 1983, as well as the drop in the June unemployment rate to a record low of 4.90%. The BoC noted that inflation has been higher and more persistent than expected and is likely to run in the 8% area over the next few months.
Wednesday – 17 August 2022
Rate Statement & Interest Rate Decision (NZD, GMT 02:00) RBNZ is seen boosting rates another 50 bps on the heels of the 50 bps hike in July. The RBNZ had increased rates 50 bps in June and another 50 bps in May. It will be the third consecutive rate hike while the markets also anticipate a fourth one. Consumer Price Index and Core (GBP, GMT 06:00) – UK inflation is expected to hit 9.9% highs y/y in July. This will be another fresh 40 year high and another clear warning that the cost of living crisis is getting worse. For the BoE the numbers will add to the arguments in favour of an acceleration in the pace of the tightening cycle. The BoE has done the expected with a 50 basis point hike, the biggest move since 1995, which brought the policy rate to 1.75%. The new projections predict recession later in the year, but keep the focus firmly on inflation, which is now expected to top out slightly over 13%. The updated policy report projects inflation to fall back to just 0.8% in the third quarter of 2025, which suggests that markets have been too aggressively pricing in additional tightening. Retail Sales (USD, GMT 12:30) – July Retail sales are anticipated flat with a -0.1% drop for the ex-auto measure, after June gains of 1.0% for both. A July pullback in prices will depress nominal sales. Sales will face a headwind going forward from a likely inability for the savings rate to fall much further, and we expect an uptick to 5.3% after a price-led June sales surge drove the savings rate down to a new 13-year low of 5.1%. The lift from the 2020-21 stimulus has faded, as the public rotates toward fears of recession.FOMC Minutes (USD, GMT 18:00) – The FOMC Minutes report provides the FOMC Members’ opinions regarding the US economic outlook and any views regarding future rate hikes.
Thursday – 18 August 2022
Employment and Unemployment Rate (AUD, GMT 01:30) – The Australian jobs market is expected to show a moderate employment report, with 25k jobs in July and unemployment unchanged at 3.5%.Philly Fed Index (USD, GMT 12:30) – The Philly Fed manufacturing index is expected to rise to -6.0 after falling to -12.3 in July, versus a 48-year high of 50.2 in April of 2021. The various producer sentiment measures have moderated through 2022 from remarkably lofty peaks for most measures last November, with readings for some measures in contraction territory, though with most of the component indexes still at respectable levels. Producers are facing big headwinds from rising interest rates and moderating economic growth, but have benefited from higher prices despite rising input costs, and the need to rebuild inventories into 2022 after the stimulus-induced 2021 sales surge.FOMC Member George Speech (USD, GMT 17:20)
Friday – 19 August 2022
RBNZ Statement of Intent (NZD, GMT N/A) – This report includes the RBNZ’s objectives for the next three years and the budget for the first year of that period.Retail Sales (GBP, GMT 06:00) – UK core retail sales for July is expected to have declined to -6.3% y/y from -5.9% y/y.Retail Sales (CAD, GMT 06:00) – Canadian retail sales for May rose to 2.2% m/m and core at 1.9% m/m.
Click here to access our Economic Calendar
Andria Pichidi
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
