Investors Avoid Risks Again (Weekly Review)

2019-08-05
Last week macroeconomic calendar was rich in important events, including the meetings of central banks such as the Bank of Japan, the US Federal Reserve and the Bank of England, as well as the publication of Eurozone inflation data and US labor market data. The Bank of Japan, as well as the Bank of England, put no changes to their monetary policy, so the market reaction to this event was insignificant. Almost no reaction was caused by the publication of Eurozone inflation data as well.

As a result of the US Federal Open Market Operations Committee Meeting, the interest rate was lowered by 0.25%, which generally coincided with forecasts of financial market participants. Less aggressive rate cuts and less “pigeon” comments by Fed Chairman Jerome Powell led to more intense activities from the bulls on the USD, mainly in pairs with the EUR and the GBP, while pressure on the latter remains due to the risks of the British chaotic exit from the EU.

Nevertheless, despite fairly good data on the US labor market, the USD closed the week with a fall against such “safe-haven” assets as the Japanese yen and the Swiss franc. A fresh wave of their purchases was triggered by a statement by Donald Trump on the introduction of import duties on goods from China, against which there was a collapse in stock indices. Until any positive news regarding negotiations between the US and China, the franc and the yen may continue to be in demand, but the interest rate differential still does not justify the sale of the USD against them.

Schedule for this week:

Monday, August 5
07:55 GMT - Germany. Markit Composite Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Composite Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:30 GMT – United Kingdom. Markit Composite Manufacturing Purchasing Managers Index (PMI);
14:00 GMT - USA. ISM Services Purchasing Managers Index (PMI).

Tuesday, August 6
22:45 GMT – New Zealand. Employment Change (Q2);
01:30 GMT - Australia. Trade Balance (Jun);
01:30 GMT - Australia. Import/Export;
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Interest Rate Decision;
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Rate Statement;
06:00 GMT - Germany. Factory Orders;
16:00 GMT - USA. Federal Open Market Committee (FOMC) Member Bullard Speaks.

Wednesday, August 7
02:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Interest Rate Decision;
02:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Rate Statement;
02:00 GMT - New Zealand. RBNZ Monetary Policy Statement;
03:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Press Conference;
06:00 GMT - Germany. Industrial Production;
07:30 GMT - Eurozone. ECB's Benoit Coeur Speaks;
14:00 GMT - Canada. Ivey Purchasing Managers Index (PMI).

Thursday, August 8
02:00 GMT - PRC. Trade Balance;
02:00 GMT - PRC. Import/Export;
12:30 GMT - USA. Initial Jobless Claims.

Friday, August 9
01:30 GMT - PRC. Consumer Price Index (CPI);
01:30 GMT - Australia. Reserve Bank of Australia Monetary Policy Statement;
06:00 GMT - Germany. Trade Balance;
08:30 GMT - United Kingdom. GDP;
08:30 GMT - United Kingdom. Industrial Production;
08:30 GMT - United Kingdom. Manufacturing Production;
12:30 GMT - Canada. Unemployment Rate;
12:30 GMT - Canada. Employment Change.

Author: Anthony Porter, IAFT Analyst

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