NFP, PMI data, and BOE are in focus!
With the cooling-off of the earnings, now, eyes turn on economic data. The week ahead will cower hug data and numbers with employment data from the US, Canada, and News Zealand, while PMI numbers from the US, UK, EU, and China to shed more light on the course of global economic recovery. Let's review the most important event and financial data of the week ahead.
Manufacturing PMI's - Monday
Monday is the Manufacturing PMI day. Australia, Spain, Italy, France, UK, and United States will report the Manufacturing numbers. As in this stage of recovery that we were expecting, in past months Manufacturing sector was increasing, now it is time to see a bit slowing down. We expect ISM Manufacturing numbers to slow down a bit in the US but still have to stay above 60-level. Theas data is generally supposed to slow down the market bulls and put the US dollar under pressure before Friday employment numbers.
RBA interest rate decision - Tuesday
Australian central bank will meet on Tuesday, and with ongoing concern about the virus developments and containment measures, we do not expect any changes in monetary policies. Reserve bank of Australia is expected to hold its dovish policies, especially with the latest comments from council members about inflation. They believe that it is transitory, as it is expected in other countries. The Australian dollar is expected to continue its downtrend after central bank dovish policies.
Services PMIs numbers - Wednesday
While we had concerns about Delta, flooding added more reasons to reduce our expectations from service sectors. Last month in the US and UK, we had a surprise fall in the service sector, although German manufacturing and services activities are above 60; however, we expect another slowdown in the recovery path for July. With labor shortage almost in all developed economies, we are also seeing evidence of weakening economic activities, and it will affect the service sectors as well, as consumers will have less encouragement to spend money. As more weakness is seeing in the US, we expect that Euro can regain some of its loss in past weeks against the US dollar.
BoE Meeting - Thursday
With the departure of Andy Haldane as chief economist from BoE board members, we were expecting the Hawkish front to become weaker, however with recent employment data which showed more than 1 million unfilled vacancies that businesses are struggling to fill, the situation is changed. Even if it is unlikely to see any changes in this week's meeting on both interest rate decisions and Asset purchasing amount, will be interesting to see the balance of votes in support of or opposition to policy maintenance. By holding the dovish policy of the central bank, we do expect to see the Footsie at higher levels.
And finally, the event of the week, US NFP - Friday.
Despite the significant increase in the new jobs numbers to 850k from 583k in June, increasing the unemployment rate to 5.9% was disappointing. Still, we do not know too much from these 9 million job openings that are currently unfilled in the US economy. How businesses can fill them is the primary inquiry of the Federal Reserve at the moment. Last week Fed Chair Jerome Powell said that the labor market still has "some ground to cover" before decreasing the supports. We hope to see a bit of a slowdown in the Stock market bulls and lift the US dollar with expected positive job data.
