The week ahead is a busy one. Besides monetary policy meetings by RBA, ECB, BOE and BOJ, a number of macroeconomic data to be released throughout the week would give further indications on the world economic developments in the second quarter. In the absence of major US data due this week, the focus would be on the Asia Pacific and Europe.
Beginning with the Asia Pacific, the RBA meeting on Tuesday would be a non-event with policymakers leaving its policy rate at 2.5%. Investors can get more hints of the monetary policy outlook through the employment report due Thursday and the quarterly Statement of Monetary Policy due Friday. Australia’s payrolls probably added +13.5K in July, following a +15.9K increase a month ago. The unemployment rate is expected to have stayed unchanged at 6%. However, an increase in participation rate might lead to a rise in the unemployment rate during the month. Australia’s trade report probably shows a widening in the trade deficit to AUD2B in June. Iron ore shipment dropped sharply during month, leading the drop in export values to outpace that of import values.
New Zealand would also release details of its employment situation in 2Q14 with the unemployment rate expected to have dropped to 5.8% from 65 in the first quarter. In China, July’s trade report and inflation data are due on Thursday and Friday respectively. The July money and credit aggregates will probably be released over the weekend.
In Europe, the ECB members are expected to stand on the sideline in August as policymakers would take time to gauge the impacts of the rate cut in June. Preside Draghi might address the issue related to the impacts of sanctions against Russia on the Eurozone, as well as the banking crisis in Portugal’s banking sector. On the dataflow, the final reading of Eurozone’s services PMIs in July would likely stay at 54.4.German’s factory orders, due Wednesday, probably gained +0.5% m/m in June, following a -1.7% decline a month ago. This would be the first indicator of the direction for industrial production. Yet, investors should note that this series is volatile and we would not be surprised to see an increase of over +1%.
The BOE would also leave the Bank Rate at 0.5% and asset purchases at 375B pound on Thursday. The minutes and the quarterly Inflation Report released later this month should give more indications on the monetary outlook. the market is expecting the first rate hike to come in 1Q15.
In the US the non-manufacturing ISM and Markit services PMI will be released on Tuesday. On
Wednesday, the June trade deficit probably narrowed modestly to US$ 44.2B from 44.4B in May. The first estimates of 2Q14 labor productivity and unit labor costs will be release. Revisions of the data over the past 3 years would be released also.