Markets focus on Brainard’s speech in Chicago
The week begins quietly with no top tier data releases. The only event to note is Fed Governor, Lael Brainard’s speech in Chicago. The markets will be scrutinising the tone of his comments to ascertain if the Fed will raise rates in September. As Brainard is a known dove, the markets will be looking for any hawkish language indicating that the Fed are planning to raise rates sooner rather than later.
This will be a busier day, with the main focus on UK Inflation. July’s inflation figure was a 20 month high at 0.6%, as higher fuel prices and Sterling weakness contributed to a sharper than expected inflation rise. There will also be a release of German CPI and Chinese investment data. We expect to see a slowing growth rate in China at 7.9% year-to-date, lower than July’s 8.1% figure. China’s Retail Sales growth will remain firm at 10.2%.
- CNY Industrial Production
- CNY Retail Sales
- German CPI
- GBP CPI
The UK will be firmly in focus again, with the release of the UK Unemployment Rate and Claimant Count Change. Recent data has pointed to employment being fairly robust. The most recent data in the 3 months to June remained at 4.9% and the Claimant Count figure dropped. July’s data is likely to show a similar reading on Wednesday. However, wage growth is anticipated to slip to 2.4%. The Eurozone Industrial Production reading will also be released and the markets will be looking for an improved figure after last month’s meagre 0.4 percent year-on-year growth. This followed a downwardly-revised 0.3 percent increase in May.
- GBP Average Earnings Including Bonus
- GBP Claimant Count Change
- GBP Unemployment Rate
- Euro-Zone Industrial Production
- NZD GDP
This will be a busy day of data, starting with Australian employment figures. Following this, the UK will publish its Retail Sales figure, Eurozone CPI and the Bank of England interest rate decision. Little action is expected from the BoE, however; we have had indications that the BoE is prepared to cut again. Despite this, recent positive data from the UK means that any further cut is highly unlikely at this meeting.
- AUD Employment Rate
- GBP Retail Sales
- Euro-Zone CPI
- BOE MPC Vote
US CPI data will be the main focus on Friday. Headline inflation in the US has been hovering around 1 percent year on year, throughout 2016. The reading was suppressed by pressure from fuel prices. Despite this, Core Inflation has been at the target level of 2.2 percent year-on-year. We can expect to see both trends continue in August with the headline rate rising up to 1 percent and Core Inflation rising to 2.3 percent.
- USD CPI
- USD Michigan Consumer Sentiment