Key data in Australia this week will be led by wage growth figures for the June quarter, the RBA’s board minutes, and the July employment report.
US stocks were steady on Friday while the UK and European markets both fell by 1% amid escalating tension between the US and North Korea.
The S&P500 eked out a small gain but finished down 1.4% for the week, its worst weekly performance since March.
Friday’s session also rounded out a tough week for Asian markets. Hong Kong’s Hang Seng index closed 2% lower while South Korean stocks fell by 1.7% as geo-political concerns weighed on sentiment.
US stocks opened higher following another soft inflation measure in July, as annual growth just missed forecasts with a print of 1.7%.
According to the CME Group’s Fedwatch tool, the probability that the US Federal Reserve will hike rates again by the end of this year has now dipped to 36.8%.
Following another low inflation reading and in keeping with the risk-off theme in global bond markets, the yield on benchmark 10-year US treasuries closed below 2.2% for the first time since June.
On currency markets, traditional safe-havens the Japanese yen and Swiss franc continued to find buyers on Friday.
The Aussie dollar moved slightly higher against the greenback, closing the week at 0.7895.
Key data points start on Tuesday with the release of the RBA’s minutes from its interest rate announcement on August 1.
Although they will likely echo the RBA’s recent cautiously optimistic outlook, the minutes from last July’s meeting were more bullish than expected and that helped fuel the Aussie dollar’s recent push above US80 cents.
Wednesday’s wage data for the June quarter will also get plenty of attention.
Australia’s slow rate of wage growth has been well-documented, given its connection to inflation and by extension the outlook for interest rates.
The market’s forecast is for modest annual wage growth of 1.9%, in line with the March quarter but still below June headline inflation growth of 2.1%.
However, as Business Insider’s David Scutt reported last week that some indicators point to a pickup in wage growth in the second half of this year.
Then on Thursday there’s the monthly employment figures, with market expectations for another 20,000 jobs to be added in July after a trend of strong employment growth through the middle part of this year.
Here’s the schedule of Australian data releases this week (via ANZ):
On Monday, Japan has Q2 GDP with annual growth forecast at 2.5%. Also tomorrow there’s industrial production and retail sales figures out of China.
Tuesday evening after Asian markets close, the UK reports annual inflation data, followed on Wednesday by average weekly earnings growth and the quarterly unemployment rate.
Also on Wednesday (4am Thursday morning AEST) the US Federal Reserve releases the minutes from its July meeting.
On Thursday night AEST the Eurozone has CPI data for July, with annual headline inflation forecast to grow at 1.3%. There’s also the minutes from the ECB’s latest policy meeting.
On Friday night after Asian markets close, Canada has annual inflation growth for July. Although Canada’s economy has been strengthening, annual inflation growth is forecast at just 1%.
Full international calendar below (via ANZ):
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