Highlights
Trading in Canada will resume on Tuesday after the markets were closed for the Civic Holiday on Monday when global markets continued plunging on fears of a US recession and the dollar fell against major currencies (some analysts had warned of overbought dollar positions). The yen has recovered most of its losses incurred against the US currency this year as weak July jobs data boosted expectations of a rate cut by the Federal Reserve following a rate hike by the Bank of Japan on July 31, with an unexpectedly hawkish tone from governor press remarks. The Nikkei 225 index plunged 4,451 points, or more than 12 percent, the sharpest drop on record that topped the previous slump recorded the following day of the US stock market crash of October 1987.
The yen first appreciated to around ¥151 on the rate hike and then to ¥144 Monday, compared to a fresh 38-year low of above ¥161.70 seen in early July. That takes some pressure off high import costs, and thus coverall consumer inflation, but Japanese politicians may be thinking they should be careful about what they wish. The notion of a much stronger yen has often triggered a knee-jerk reaction of selling shares in exporters as their overseas profits would drop when they are repatriated.
Before the European and North American markets open, the Reserve Bank of Australia will announce its policy decision at 1430 AEST (0430 GMT/0030 EDT) Tuesday.
The RBA is expected to leave its policy rate unchanged at 4.35 percent for a sixth straight meeting after raising it by 25 basis points to the current level in November 2023. In its June statement, the bank repeated that inflation was easing more slowly than expected and still high. The board expects that"it will be some time yet before inflation is sustainably in the target range (of 2 to 3 percent)." Governor Michele Bullock told reporters that"the board did discuss the case for increasing interest rates" but also said"the case for a cut was not considered." The CPI data for April-June released last week showed the annual consumer inflation rate rose to 3.8 percent from 3.6 percent in the previous quarter while inflation moderated to 3.8 percent in July from 4.0 percent in June in the monthly CPI data.
In Switzerland, the adjusted unemployment rate is expected to edge up 0.1 percentage point to 2.5 percent in July.
German manufacturing orders are expected to increase a monthly 0.8 percent in June versus May's unexpected 1.6 percent decline, which was the fifth dip in a row and the fifth month in a row to miss the consensus estimate.
Swiss retail sales are forecast to show a 0.5 percent increase on the year, up marginally from May's 0.4 percent gain.
Consumer inflation in Taiwan is expected to accelerate further to 2.50 percent in July after rising to 2.42 percent in June from 2.24 percent in May. It would remain the highest since February when the CPI jumped 3.08 percent on the year. At its quarterly meeting on June 13, the Central Bank of the Republic of China (Taiwan) left its main policy rate unchanged at 2.00 percent, following a surprise rate hike by 12.5 basis points in March tame inflation, which was the first increase in 12 months and took the rate to its highest level since 2008.
The UK construction purchasing managers' index (PMI) is expected to slip from 52.2 in June to 51.0 in July.
Eurozone retail sales volumes in June are expected to edge 0.1 percent higher on the month to match May's very sluggish 0.1 percent showing.
In the US, a deficit of $72.5 billion in June is forecast for total goods and services trade, which would compare with a $75.1 billion deficit in May. Advance data on the goods side of June's report showed a $2.6 billion narrowing in the deficit.
Canada's trade balance is seen in deficit of C$1.9 billion in June, which would match May's deficit of C$1.9 billion and compare with April's deficit of C$1.3 billion.
New Zealand's unemployment rate is forecast at 4.7 percent in the second quarter, up from 4.3 percent previously. Employment is seen down 0.3 percent quarter versus a 0.2 percent drop. On the year, employment growth is forecast to be flat after a 1.2 percent gain.
The yen first appreciated to around ¥151 on the rate hike and then to ¥144 Monday, compared to a fresh 38-year low of above ¥161.70 seen in early July. That takes some pressure off high import costs, and thus coverall consumer inflation, but Japanese politicians may be thinking they should be careful about what they wish. The notion of a much stronger yen has often triggered a knee-jerk reaction of selling shares in exporters as their overseas profits would drop when they are repatriated.
Before the European and North American markets open, the Reserve Bank of Australia will announce its policy decision at 1430 AEST (0430 GMT/0030 EDT) Tuesday.
The RBA is expected to leave its policy rate unchanged at 4.35 percent for a sixth straight meeting after raising it by 25 basis points to the current level in November 2023. In its June statement, the bank repeated that inflation was easing more slowly than expected and still high. The board expects that"it will be some time yet before inflation is sustainably in the target range (of 2 to 3 percent)." Governor Michele Bullock told reporters that"the board did discuss the case for increasing interest rates" but also said"the case for a cut was not considered." The CPI data for April-June released last week showed the annual consumer inflation rate rose to 3.8 percent from 3.6 percent in the previous quarter while inflation moderated to 3.8 percent in July from 4.0 percent in June in the monthly CPI data.
In Switzerland, the adjusted unemployment rate is expected to edge up 0.1 percentage point to 2.5 percent in July.
German manufacturing orders are expected to increase a monthly 0.8 percent in June versus May's unexpected 1.6 percent decline, which was the fifth dip in a row and the fifth month in a row to miss the consensus estimate.
Swiss retail sales are forecast to show a 0.5 percent increase on the year, up marginally from May's 0.4 percent gain.
Consumer inflation in Taiwan is expected to accelerate further to 2.50 percent in July after rising to 2.42 percent in June from 2.24 percent in May. It would remain the highest since February when the CPI jumped 3.08 percent on the year. At its quarterly meeting on June 13, the Central Bank of the Republic of China (Taiwan) left its main policy rate unchanged at 2.00 percent, following a surprise rate hike by 12.5 basis points in March tame inflation, which was the first increase in 12 months and took the rate to its highest level since 2008.
The UK construction purchasing managers' index (PMI) is expected to slip from 52.2 in June to 51.0 in July.
Eurozone retail sales volumes in June are expected to edge 0.1 percent higher on the month to match May's very sluggish 0.1 percent showing.
In the US, a deficit of $72.5 billion in June is forecast for total goods and services trade, which would compare with a $75.1 billion deficit in May. Advance data on the goods side of June's report showed a $2.6 billion narrowing in the deficit.
Canada's trade balance is seen in deficit of C$1.9 billion in June, which would match May's deficit of C$1.9 billion and compare with April's deficit of C$1.3 billion.
New Zealand's unemployment rate is forecast at 4.7 percent in the second quarter, up from 4.3 percent previously. Employment is seen down 0.3 percent quarter versus a 0.2 percent drop. On the year, employment growth is forecast to be flat after a 1.2 percent gain.
Definition
Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.
Description
Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.
