Weekly Outlook 28 August to 3 July

This will most likely be dominated by issues surrounding the US economy and the Federal Reserve’s rates policy. Although the market retains huge scepticism concerning the possibility of a near term rate increase by the Feds. The latest set of employment results will be critical to the outlook for a rate hike, market participants will also watch the comments made by fed officials very closely in search of hints concerning a near term rates hike.

Looking at the big picture, the overall data releases for the week will have a very significant effect on the projections of major policy decisions during the autumn. Market Liquidity will also be a major factor as there will be a UK holiday on Monday which is closely followed by the US Labour day happening the following Monday. A slide in volumes resulting from these holiday periods will raise the risk of the market maintaining a very volatile range.

Major releases for the week include:

The US Non-Farm Payroll

The US employment report for August is scheduled for release on Friday 2nd of September at 08.30 EST. There will be a lot of anticipation for the data release as the previous week ended with most of the market’s attention directed at the dollar. After last month's report showed a major increment in non-farm payrolls employment report was reported stronger than anticipated at 255,000 after an overhauled 292,000 employment gain for the earlier month. The extremely feeble May data and the contrasting June strength tended to offset each other, with the July strength being conceivably more vital.  The current month's release if positive will provide some uptick for issues spanning from the Federal Reserve outlook.

The Chinese PMI Data

China’s official and Caixin PMI data is scheduled to drop on Thursday September 1st, with the official data at 21.00 EST on Wednesday. In light of the drop in market and media attention on the Chinese economy over the last few weeks, the background trends will remain very essential to the Chinese market outlook. Signs of a fresh slump in the performance of the Chinese economy will raise fears surrounding the global growth outlook, especially after Fed Chair Yellen’s comments on monetary policy on Friday led to the widest trading range of the week for the Dollar/Yuan after relatively quiet price action for the four days prior.

Euro-zone CPI Data

The next reading from the Eurozone flash CPI is due for release on Wednesday August 31st at 05.00 EST. The ECB continues to wrestle with falling inflation towards its target of under 2% as the figures currently approach 2%. The new inflation data will be very crucial to the assessment of the progress of the target and the likelihood of further action from the central bank aimed at monetary easing before the year runs out.

Energy prices have increased over the month which should tend to put some upward pressure on headline inflation. Markets will also be looking at the core rate to assess underlying inflation trends. Although the ECB does not officially target the core rate, this data may actually be more important in the short term, especially given uncertainty over inflation expectations.

Any decline in the inflation rate would increase pressure for further monetary action while a stronger rate would raise speculation that the ECB could be looking to taper bond purchases from early in 2017.

Other Major Releases Include

• US Core PCE Price Index


• UK PMI Manufacturing