Week ahead: August 27th to 31st

Europe’s CPI rates and US GDP growth rate to get market’s attention Next week’s market movers

  • On Monday, from Germany we get the Ifo Business Climate indicator for August. 
  • On Tuesday, the US CB consumer Confidence for August will be released. 
  • On Wednesday, the US GDP growth rate for Q2 is to get the market’s attention, while at the same day France’s GDP growth rate for Q2 and Canada’s Current account balance for Q2 are due out. 
  • On Thursday, Germany’s unemployment data are to be released for August, but the market’s attention may be on Germany’s HICP rate for August as well as Canada’s GDP growth rate for August. 

On a busy Friday, we get Japan’s unemployment rate for July, China’s manufacturing PMI for August, but the stars of the day should be France’s and Eurozone’s CPI rates for August, while at the same time we get Eurozone’s unemployment rate for the same month. As holidays slowly draw to an end the coming week a number of financial data releases could get the attention of the markets. Our team handpicked the ones which it considers as the most influential and discusses their possible (current) forecasts and their respective effects on various currencies.

On Monday, during the European session we get Germany’s Ifo Business Climate index for August. The index is forecasted to reach 101.9 if compared to previous reading of 101.7. Should the forecast be realized we could see the EUR strengthening as the rise of the indicator would mark a turning point of its downward direction and at last an expected improvement of the business climate in the largest economy of the Eurozone.

On Tuesday, we get the US CB Consumer Confidence indicator for August. The indicator is forecasted to drop reaching 126.2 if compared to previous reading of 127.4. Should the forecasts be realized we could see the greenback slipping as the indicator’s drop will be substantial and could mark a return to decreases, after last month’s increase. Also a drop of the indicator could imply that consumer are trusting he US economy less, hence there could be less retail sales in months to come, if the drop continues.

On Wednesday, during the European morning we get France’s second release of the GDP growth rate for Q2. The rate is forecasted to remain unchanged at +0.2% qoq if compared to both the preliminary release as well as first quarters final reading.

Should the forecast be realized we could see the single currency slipping as the rate remains at low levels and could signal a low growth rate for the Eurozone as the French economy is the second largest in the area.
In the American session we get the second estimate of the US GDP growth rate for Q2. The rate is forecasted to tick down to +4.0 qoq if compared to the preliminary reading of +4.1% qoq.

If the forecast is realized we could see the USD getting some support as the accelerated GDP growth rate of the preliminary release will be confirmed strengthening the case for the Fed to continue on its current rate hike path.
Last but not least in the American session we get Canada’s current account balance which is forecasted to be a narrowed deficit of -18.0B, if compared to previous reading of -19.5B. Should the forecast be realized we could see the CAD getting some support as the narrowing of the Current account deficit even by a 1.5B, would be a turning point after last month’s 1+ year low.

On Thursday, in the European session we get Germany’s unemployment data for August. The unemployment rate is forecasted to remain unchanged at +5.2% yoy if compared to previous reading, while the unemployment change is expected to reach -8k if compared to previous reading of -5k. Should the forecasts meet the data we could see the common currency strengthening as the unemployment rate remains at low levels, while the unemployment dropped at a higher number albeit small. Staying in Germany, later we get the preliminary HICP rate for August.

The rate is forecasted to remain unchanged at +2.1% yoy if compared to previous month’s final reading. Should the forecast be realized we could see the single currency getting some support as the rate remains at rather high levels and thus supports the arguments for a healthy inflation rate for the Eurozone. In the American session, we get Canada’s GDP growth rate for Q2. The rate’s last reading was a +1.3% qoq (Annualized). Should there be a reading higher than +1.3% qoq, we could see the Loonie getting some support as it would imply a faster growth rate for the Canadian economy and could build more confidence for the BoC’s outlook.

On a busy Friday, in the Asian session we get Japan’s unemployment rate for July. The rate is forecasted to remain unchanged at 2.4%, if compared to previous month’s reading. Should the actual rate meet the forecast we could see the JPY strengthening, as the rate remains at very low levels. It should be noted though that the Japanese has been accustomed to such low unemployment rates and hence the market’s reaction may be somewhat muted. Also during the Asian session we get China’s NBS Manufacturing PMI for August.

The indicator is forecasted to drop to 51.0 if compared to previous reading of 51.2. Should the indicator drop as forecasted or beyond we could see the Aussie and the Kiwi weakening as the drop could be implying less manufacturing activity in the following months, hence lesser imports from Australia and New Zealand. In the European session we get France’s preliminary CPI (EU normalized) rate for August. The rate is forecasted to remain unchanged at +2.6% yoy if compared to previous reading. Should the forecast be realized we could see the common currency getting some support, as the rate would remain at the highest level for the past 3+ years and could support the argumentation for a healthy Eurozone CPI rate which is the next indicator to be examined.

Later in the European session we get Eurozone’s preliminary releases of the CPI and Core CPI rates for August. Both the headline and core CPI rates are to remain unchanged at +2.1% yoy and 1.1% yoy respectively, if compared to previous month’s readings. Should the actual rates meet the forecasts we could see the EUR strengthen as the rates remain at the high levels especially the headline CPI rate which at its highest level for the past 3+years. There are some worries though as the core CPI rate remains steadily near the +1.1% yoy. Last but not least we get Eurozone’s unemployment rate for July. The rate is forecasted to tick down to 8.2% if compared to previous month’s reading of 8.3%. Albeit the forecasted drop is small, should it materialize it would cause the unemployment rate to reach a new low for over 3 years and could provide some support for the common currency.