Forecasting the upcoming week: Busy week with focus on the US labour market

The US Dollar (USD) has managed to regain composure and trim part of the severe sell-off that kicked in in late mid-July. The absence of relevant news from the Middle East has motivated investors to shift their attention to the US money market as well as data releases, while Chair Warsh’s hawkish message at the Jackson Hole Symposium boosted the demand for the buck at the end of the week.

The US Dollar Index (DXY) has ended the week in the upper end of the range, reclaiming the 99.00 barrier and well beyond, helped by a decent recovery in US Treasury yields across the curve as well as steady uncertainty surrounding the US-Iran-Hormuz conflict and the resurgence of the Fed’s tighter-for-longer narrative. The Dallas Fed Manufacturing Index is due on August 31. The ISM Manufacturing PMI takes centre stage on September 1 alongside JOLTs Job Openings, Construction Spending, the final S&P Global Manufacturing PMI, the Dallas Fed Services Index and the API’s weekly report on US crude oil stockpiles. On September 2, the ADP Employment Change, weekly MBA Mortgage Applications, Factory Orders and the EIA’s weekly report on US crude oil inventories all precede the release of the Fed Beige Book. The usual weekly Initial Jobless Claims is due on September 3, followed by the final S&P Global Services PMI and the ISM Services PMI. The August Nonfarm Payrolls will be the salient event on September 4 along with the Unemploment Rate data.

EUR/USD has left behind four consecutive weekly advances, briefly breaching below the 1.1600 contention zone amid the generalised move higher in the US Dollar. Germany’s flash Inflation Rate is due on August 31. Still in Germany, Retail Sales prints will come on September 1 alongside the final S&P Global Manufacturing PMI. In the broader Euroland we will see the Unemployment Rate, the advanced Inflation Rate and the final S&P Global Manufacturing PMI. Producer Prices in the euro zone are due on September 3, seconded by the final S&P Global Services PMI in the region and Germany. German Factory Orders will close the docket on September 4 along with the S&P Global Construction PMI in both Germany and the euro area and Retail Sales in the whole bloc.

GBP/USD’s multi-week recovery appears to have taken a breather, ending the week with marked losses after an unsuccessful attempt to regain the area beyond 1.3600 the figure in a convincing fashion. In the meantime, no activity is expected on August 31 due to the Bank Holiday in the UK. The BRC Shop Price Index Inflation is due on September 1, seconded by the Nationwide Housing Prices, Mortgage Approvals/Lending, the BoE Consumer Credit figures and the final S&P Global Manufacturing PMI. On September 3 will come the final S&P Global Services PMI, while the BoE’s DMP and the S&P Global Construction PMI will close the calendar on September 4.

USD/JPY has rapidly forgotten last week’s hiccup, regaining upside traction and flirting with the key 160.00 barrier, or four-week tops. On the Japanese docket, preliminary Industrial Production data will be released on August 31, followed by Retail Sales, Consumer Confidence, Construction Orders and Housing Starts. Capital Spending figures and the final S&P Global Manufacturing PMI are due on September 1, while the Monetary Base data is expected on September 2. On September 3 comes the final S&P Global Services PMI and weekly Foreign Bond Investment prints. The preliminary Coincident and Leading Economic indices, along with Household Spending figures, are due on September 4, closing the week.

AUD/USD has followed its own dynamics, outperforming the rest of its risk-linked peers and surpassing 0.7200 the figure for the first time in the last three months. Quarterly Business Inventories figures are expected on August 31, followed by Housing Credit data and Private Sector Credit. The final S&P Global Manufacturing PMI, Building Permits, Private House Approvals, Commodity Prices and quarterly Current Account results are due on September 1. The Ai Group Manufacturing Index comes on September 2, along with the Q2 GDP Growth Rate. September 3 will see the final S&P Global Services PMI published alongside Trade Balance results.

Anticipating economic perspectives: Voices on the horizon

• The BoJ’s Takada speaks on September 2, followed by the ECB’s Nagel
• The RBA’s Jones is due to speak on September 3, seconded by the Fed’s Waller.
• The BoE’s Bailey will speak on September 4.

Central banks: Upcoming meetings to shape monetary policies

• The RBNZ will decide on rates on September 2 (2.50% act, 2.75% exp), followed by the BoC (2.25% act, 2.25% exp).
• The BNM meets on September 3 (2.75% act, 2.75% exp).