Weekly Outlook, 30 Aug- 3 September 

Eyes turn to NFP data!

Market analyst – IFC Markets

While Powell did not offer any clear vision on FED policies, in the week ahead we have to watch the non-farm payroll numbers to have a better idea of the current employment situation in the US. On the other hand in line with other important economic data, we should not forget about Covid-19 risks as well. Let’s take a quick look at the week ahead and its most important events. 

Global GDP – Whole week

The week ahead is the GDP week. In this week we will have gross domestic product numbers from Russia, France, Italy, And, Brazil, Australia, Turkey, South Korea and, Swiss. The leading indicator will tell us how the global economy is healthy. We are generally expecting to see positive data and good improvement in the second quarter’s final numbers. Even if these data are for the quarter that has passed, however detailed data and numbers can affect market sentiment! 

European Inflation – Tuesday

About inflation, while it is a concern in many economies, European headline CPI is at 2.2% at the moment, this is while the interest rate of the European Central bank well sits at the negative territory. ECB President Christine Lagarde has said rates would rise once 2% inflation becomes sustainable, so it will take time for ECB to consider about rate raise. German DAX is still expected to increase, and this data also will support it. 

US ISM Surveys – Wednesday & Friday

After weakness in the past two months, now we are waiting for another decrease in both ISM Services & Non-Manufacturing PMI numbers. The key services number is expected to fall back to 63.0 in August from 64.1. The service sector is the most important component for the US economy, however, these numbers will publish after the US payrolls numbers, so their importance will be affected by employment data. 

Global Services PMIs- Friday

Friday while we are looking after US NFP numbers, another key data that we have to focus on that, is the Service Purchasing Manager Index numbers. Australia, China, Russia, Turkey, Spain, Italy, Swiss, Eurozone, and the UK are the economies that will publish their numbers. Market participants will mostly focus on Eurozone and UK numbers. Both economies saw weakness in their activities in the past months, especially in manufacturing data. For the service sector also now we are waiting to see a weakness, especially in the UK, because they could not get the advantage of summer holidays, because of the latest corona wave and self-isolating. Expected weakness is supposed to weigh on the pound against its crosses. For cable, since weakness in the US dollar also is expected to be seen, we can expect a neutral trend. 

US non-farm payrolls – Friday

The created dichotomy between FOMC members could even deepen. Even though the official unemployment rate in July fall to 5.4% from 5.9% of month ago, and for August also market expecting another decrease to 5.2%, still details numbers like 7 million employees less than pre-pandemic and lower participant rate, which fell to 61.7% from 63.4% of pre-pandemic are a bit worrying. 728,000 jobes are expected to be created in August. Beating numbers can increase the chance of tapering earlier in this year, which is not positive for the Stock Markets in the mid-term. Thanks for being with us and hope you will have a great week ahead

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