AUSTRALIAN DIARY: Everything you need to know about the week ahead for markets

(Linnea Rheborg / Getty Images)

Trade war fears continued to weigh on global markets to end the week, after President Trump said he was ready to impose tariffs on all $US500 billion worth of goods that China exports to the US.

US stocks edged lower while falls in European markets were led by Germany’s DAX index, with automakers hardest hit as the Trump administration continues to discuss a 20% tariff on European vehicles.

The US dollar index fell for the second straight day, capping a 1.1% decline since Trump said on Thursday that he was concerned about the US Fed hiking rates.

According to CME’s Fedwatch tool, the probability of a December rate hike by the US Fed held steady at above 50% following Trump’s comments.

Benchmark US 10-year bond yields pushed higher to 2.89%, which saw the yield spread between 2-year and 10-year bonds widen for the first time in eight days.

The greenback continued to strengthen against the Chinese yuan, with USD/CNY briefly pushing above 6.8 before easing back. Broader weakness in the USD saw the Aussie rise back above US74 cents.

To the week ahead:


Key data will be led by all-important CPI figures for the three months to the end of June (Wednesday, 11:30am AEST).

The quarterly inflation print remains one of the most important data releases on the calendar, given its influence on the outlook for interest rates.

Higher petrol prices are expected to drive annual headline inflation above 2%, back within the RBA’s target range between 2-3%.

However, Commonwealth Bank expects annual growth in core inflation to remain more subdued at 1.9%.

“Despite the lift in headline inflation expected in Q2, we think that the RBA will stay on the sidelines for some time yet,” said CBA senior economist Kristina Clifton.

“That is because headline inflation is likely to drop back again in Q3 and underlying inflation is still low. Also wages growth is soft and expected to pick up only gradually from here.”

Elsewhere in Australia it’s a relatively quiet week, with two other releases due from the ABS — the international trade price index for June on Thursday, and quarterly PPI data on Friday.


The international calendar is also fairly quiet, with key events led by the European Central Bank’s monetary policy meeting on Thursday night.

“ECB policy seems set for the next year or so. While headline risks remain, we are unlikely to see any fundamental shift in market pricing after this week’s meeting,” ANZ’s currency strategists said.

ANZ added that updated July PMI data for the US, Europe and Japan on Tuesday “will be one of the most important releases this week, given the vulnerability of risk appetite to slowing global momentum”.

Data in the US will be led by GDP figures for the June quarter on Friday night. “Q2 GDP will be strong, but that’s likely priced in”, to the US dollar, ANZ said.

“Catalysts for renewed strength in the USD are becoming less obvious, so we are likely to see some consolidation in the greenback rather than an outright fall.”

Here’s the full calendar, via ANZ (key events for currency markets in dark blue):

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