Weekly Outlook, 6-10 Sep

Central Banks Chinese trade data! 

Market analyst – IFC Markets

After a crazy week at the beginning of September, next week will be Banking week. RBA, BoC, and ECB will have monetary policy meetings and interest rate decisions. Even though it is unlikely to see any changes in their policies, still will be important to follow their meetings. On the other hand, we will have GDP, PPI, and CPI from the EU, US, and China. Let’s review the most important events of the week ahead. 

China trade data – Tuesday

After Holiday in North American markets on Monday, Tuesday will be the important day. On the Chinese data front, we should not be surprised if they show us less export and import. According to economic data, Chinese domestic demand in the past months had decreased. And with falling the US consumer confidence as the biggest Chinese foreign market, export numbers should face some difficulties. We are expecting to see another slowdown in the Chinese economic data. In past weeks, the Chinese Yuan was gaining against the USD, but in the week ahead, weaker Chinese data cannot be that much supportive for Yuan! 

 

Interest Rate decision and Monetary Policy Meeting in Australia – Tuesday

Same as other leading economies, Australian Economic data also were not that hopeful and confirmed the slowdown in economic activities as we saw in GDP numbers. On the other hand new wave of COVID-19 with the latest variants all around the globe, improving the market risk, and weakness in the economic data, putting the holding policy fans in a stronger position. Australian stock markets also should be supported with holding current policies. 

 

Interest Rate Decision and Monetary Policy in Canada – Wednesday

In the past two meetings, the Bank of Canada reduced the QE to 2B from 4 Billion Canadian dollars. Increasing the Oil price in the past months, helped the Canadian economy to grow better. Recently the central bank revised up the 2022 economic growth Outlook to 4.5%. Even though if there are signs of the virus spreading, still we are expecting to see another decrease in Quantitative easing amount to 1 Billion Canadian Dollars per week. Canadian Dollar with this Hawkish policy is expected to increase. 

 

ECB Meeting – Thursday

After the last meeting, that focus was on European Central Bank’s change to its inflation mandate, this week’s discussion will move onto the future of its pandemic emergency purchase program (PEPP). According to the latest data, Inflation in Eurozone increased above 3%, while the labor market also doing well. This data tells us that the Hawkish policy idea will have more supporters. On the other hand, with slower recovery in the European economy, Election in Germany also pausing any changes at the moment, at least until next month and next meeting. If we do not see the changes, European stocks that are pricing on extending the supports will be less bullish, while Euro can get back to its previous downtrend against the US dollar. 

 

US Producer Inflation – Friday

With financial data that showing economic growth is getting slower, while NFP also was surprising last Friday, we do not expect that producer inflation can make any changes in investors’ outlook. For now, as long as raw material costs are higher because of damaging the supply chain, we do not expect a decrease in inflation. For August PPI is expected to rise by 8.3%, with core prices rising 6.6%, up from 6.2%. This is supposed to hold the bears in the US Dollar chart for a bit longer time.


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