Economic releases will heat up in the coming week with monthly data on inflation, employment and retail sales certain to keep some traders busy as many head off for their summer holidays. Central bank meetings will take a backseat, though the week will not be totally absent of policy announcements as the Norges Bank meets to decide on rates.
Australian employment in focus for the aussie
The Australian dollar hit its lowest since January 2017 of 0.7278 this past week, with US-China trade worries weighing on the currency. Previously – since late June – a neutral RBA largely confined the aussie to a range, as the central bank has signalled it wants to see higher wage growth before it begins considering raising rates. Wage growth and employment figures due next week will therefore fall under the spotlight as they could provide some hints as to the timeline of an RBA rate hike. The quarterly wage price index is out on Wednesday and the employment report for July will follow on Thursday. Also attracting attention for the aussie will be survey data, consisting of the NAB business confidence gauge on Tuesday and Westpac’s consumer sentiment index on Wednesday.
Chinese July indicators to be watched for tariffs impact
There was some relief this week as trade numbers showed exports from China rose by more-than-expected in July. Specifically, they surged by a solid 12.2% year-on-year, with little evidence so far that the US tariffs on Chinese goods implemented in July had a notable impact. Analysts aren’t forecasting a major drag on industrial output either as the sector is expected to have grown by 6.3% y/y in July, accelerating from the prior 6.0% rate. Investment in urban areas is expected to have risen by 6.0% y/y in the year-to-date in July, the same pace as in June. Growth in retail sales is also forecast to remain steady, at 9.0% y/y in July. The figures are due on Tuesday. While a deterioration in the data is not being anticipated, neither are they expected to point to strong momentum and so may not do much in lifting market sentiment and in turn the aussie which is a viewed as a liquid proxy for “China plays”, given that China is Australia’s biggest export market.
Japanese exports to moderately accelerate in July
While ongoing trade tensions have kept the yen in demand in recent weeks, growing speculation that the Bank of Japan is slowly moving towards tighter monetary policy have also been supporting the currency. Upbeat trade figures due during Thursday’s Asian session may add to the positive sentiment for the yen. Exports are forecast to increase by 6.3% y/y in July, below June’s 6.7%, while import growth is expected at 14.4% y/y during the same month, at a much higher pace compared to June’s 2.6%. Moreover, data out