The US holiday on Monday will make the remainder of the week all the more intensive. It starts the month that’s been historically poor for stocks with the US indices close to all-time highs but some emerging markets on their knees (not a typical mix). The calendar is full of data with the US NFP and ISMs topping the list but investors need to watch geopolitics as well as Donald Trump seems to be ready to heat up Trade Wars again.
Looking at today’s calendar one may notice that it is not packed with too many releases unlike the upcoming days. It is worth keeping an eye on PMIs from Europe and some other prints anyway. Turkish CPI (8:00am BST) could attract some investors’ attention. Subsequently, PMIs from Spain (8:15am BST), Italy (8:45am BST) and the United Kingdom (9:30am BST) will be released. It is expected that British PMI will show a slight decline from 54 to 53.8.
The US NFP report (Friday, 1:30pm BST)
The August NFP report is the last key release ahead of the FOMC decision in September. Regardless of the report the Fed will raise rates at the next meeting but the data might have an impact on a message from the meeting that could be more important than the decision. The key question ahead of the report is: will we finally see a pick-up in wage growth? Wages have been rising only gradually giving the Fed a comfort to move up rates at a measured pace. Affected markets: EURUSD, Gold.
The US ISM reports (Tuesday and Thursday, 3pm BST for both)
July ISM reports saw major pullbacks albeit from high levels. Because the pace of economic growth in the US has been high, this has been barely noticed. But another setback would be alarming as some of the US data has been disappointing lately. Remember, the White House uses a period of strong growth to wage their Trade Wars so slowing US economy could undermine this tactic. Affected markets: US500, USDJPY.
Trade Wars (full week)
Although the calendar is stacked with macroeconomics releases it’s very likely that politics could dominate the markets. After signing the NAFTA deal president Trump feels invigorated to wage a fresh Trade War with China and Europe in a search of better deals. This process could be painful and tariffs on $200 billion of the Chinese imports are going to hurt economic growth. Global market got a bit used to this risk but with US markets at all time highs it might not be a good time for complacency. Affected markets: DE30, AUDUSD.
