Following a glut of jawboning by various central bankers that sent forex markets into a bit of a flap and equities plunging, the focus this week is on the more mundane batch of monthly data releases that mark the start of the second half of the year.
Nonfarm Payrolls
The big data event is Friday’s monthly gauge of US labour market health, the always keenly-anticipated nonfarm payrolls and average earnings report. The data is seen as a key indicator of the state of the US economy and the likely path of monetary policy.
It has added spice this month as markets are increasingly betting against the Fed’s willingness to tighten. A flattening yield curve has many economists concerned about a potential Fed policy ‘mistake’ that could lead to recession. The Fed says it will hike once more this year but with the spread between 2-year and longer maturity paper collapsing many are worried the Fed is tightening too quickly. The spread between the 2-year and 10-year notes has shrunk to its lowest since last August’s nine-year low.
In addition to the headline number, the average weekly earnings data is an important gauge of inflationary pressures feeding through into the economy.
PMIs
The start of the month sees the usual deluge of purchasing managers’ indices (PMIs), which will complete the picture for Q2 growth in the major economies. Manufacturing surveys are out on Monday with service sector reports on Wednesday.
G20 Meetings
Geopolitics and macro-economic trends will be among the talking points as world leaders gather for the G20 meetings in Hamburg, which kicks off on Friday. Issues such as climate change, free trade and migration will feature heavily.
Canada rates
A batch of economic data from Canada will be closely followed by forex markets as traders raise their expectations for a rate rise this summer. More hawkish comments from Bank of Canada governor Stephen Poloz has upped the chances the central bank will pull the trigger at its July meeting. The Bank of Canada is due to decide on policy on July 12th.
RBA
Sticking with central banks and it’s the Reserve Bank of Australia (RBA) interest rate decision on Tuesday. With potentially thin liquidity stemming from the US Independence Day holiday it could be a bit choppy.
Even though the central bank is widely anticipated to hold rates at this meeting, there are signs policymakers are eyeing an imminent path towards normalisation. The RBA has forecast inflation returning to target and economic growth to surge to 3% as the global economy picks up. Former board member John Edwards recently weighed into the debate by suggesting the bank could raise rates as many as eight times in the next two years.
Economic Calendar
(All times BST)
Monday, 3 July
US markets close early
00:50 – Japan Tankan manufacturing and non-manufacturing indices
01:30 – Japan final manufacturing PMI
02:30 – Australia building approvals
02:45 – China Caixin manufacturing PMI
09:00 – Eurozone final manufacturing PMI
09:30 – UK manufacturing PMI
15:00 – US ISM manufacturing PMI
23:00 – New Zealand NZIER business confidence
Tuesday, 4 July
All day – US markets shut for Independence Day holiday
02:30 – Australia retail sales
05:30 – Reserve Bank of Australia cash rate and statement
06:00 – Bank of Japan core CPI
08:00 – Spain unemployment rate
09:30 – UK construction PMI
Wednesday, 5 July
09:00 – Eurozone final services PMI
09:30 – UK services PMI
15:00 – US factory orders
19:00 – FOMC meeting minutes
Thursday, 6 July
02:30 – Australia trade balance
08:15 – Swiss CPI
12:30 – ECB monetary policy accounts
13:15 – US ADP nonfarm employment change
13:30 – Canada trade balance, building permits
13:30 – US trade balance, weekly unemployment claims
15:00 – US ISM non-manufacturing PMI
16:30 – US crude oil inventories
Friday, 7 July
All day – G20 meetings kick off
08:30 – Halifax UK house price index
09:30 – UK manufacturing production
13:30 – Canada unemployment rate, employment change
13:30 – US nonfarm payrolls, average earnings
Corporate Calendar
Tuesday, 4 July
(St.Modwen Properties (LON:SMP)) – interim results
Wednesday, 5 July
SIG (LON:SHI) – trading update
Booker Group (LON:BOK) – trading update
Thursday, 6 July
Bovis Homes Group (LON:BVS) – trading update
Persimmon (LON:PSN) – trading update
Friday, 7 July
Dunelm Group Plc (LON:DNLM) – trading update
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