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31 Aug 2015
Busy week: US NFP, China PMI, RBA, ECB - Nomura
FXStreet (Bali) - David Fritz, FX Strategist at Nomura, takes a look at this week's key events, with US NFP and China's PMI taking centre stage, while other Central Banks (RBA, ECB) also updating monetary policies.
Key Quotes
"After a week of market discord, there may be focus returning to economic data, of which there is plenty next week. The major headlines these days tend to come from the United States and China, but there will also be data and central banks meetings around the world."
"China will release data on official PMIs for August on Tuesday next week. The Caixin flash PMI was already released, and disappointed, suggesting that growth momentum may have slowed in Q3. Surprising PMIs may jolt the market yet again, although the government has been implementing measures (and may do more) to calm the markets and stimulate the economy."
"The most important data point from the United States is the nonfarm payrolls on Friday, which our economists are expecting to show an increase of 220K (August Private Payrolls Tracking, 27 August 2015). As usual, ADP payrolls data will be out on Wednesday, which we estimate will show an increase of 210K."
"Other data in the United States include ISM manufacturing, which our economists expect to show a slight decline, weighed down by growing uncertainty around Chinese growth, continued declines in oil prices, and a strong dollar."
"The RBA, Riksbank, and ECB all have policy meetings next week, and all are expected to remain on hold. Our house view on the RBA is that they will remain on hold at this meeting but that another cut remains likely going forward. Of particular interest may be comments on developments in China and AUD."
"We expect the ECB to stay put, but our economists have noted that risks have increased and that there is an increasing likelihood that ECB President Draghi will deliver a surprise. Recent comments have been inconclusive, but the data have shown continued pressure, with inflation on Monday expected to show a fall to 0.1% in inflation."
"For the Riksbank, we assign a three-quarters likelihood of no action (base case), but risk of dovish action remains. Domestic data have been generally positive, but there is heightened risk from external factors, which adds to their dovish leaning."
Key Quotes
"After a week of market discord, there may be focus returning to economic data, of which there is plenty next week. The major headlines these days tend to come from the United States and China, but there will also be data and central banks meetings around the world."
"China will release data on official PMIs for August on Tuesday next week. The Caixin flash PMI was already released, and disappointed, suggesting that growth momentum may have slowed in Q3. Surprising PMIs may jolt the market yet again, although the government has been implementing measures (and may do more) to calm the markets and stimulate the economy."
"The most important data point from the United States is the nonfarm payrolls on Friday, which our economists are expecting to show an increase of 220K (August Private Payrolls Tracking, 27 August 2015). As usual, ADP payrolls data will be out on Wednesday, which we estimate will show an increase of 210K."
"Other data in the United States include ISM manufacturing, which our economists expect to show a slight decline, weighed down by growing uncertainty around Chinese growth, continued declines in oil prices, and a strong dollar."
"The RBA, Riksbank, and ECB all have policy meetings next week, and all are expected to remain on hold. Our house view on the RBA is that they will remain on hold at this meeting but that another cut remains likely going forward. Of particular interest may be comments on developments in China and AUD."
"We expect the ECB to stay put, but our economists have noted that risks have increased and that there is an increasing likelihood that ECB President Draghi will deliver a surprise. Recent comments have been inconclusive, but the data have shown continued pressure, with inflation on Monday expected to show a fall to 0.1% in inflation."
"For the Riksbank, we assign a three-quarters likelihood of no action (base case), but risk of dovish action remains. Domestic data have been generally positive, but there is heightened risk from external factors, which adds to their dovish leaning."