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Monetary Policy Speculation Continues Next Week With NFPs, RBA and BoE

Monetary Policy Speculation Continues Next Week With NFPs, RBA and BoE

John Kicklighter, Yash Gandhi,


Talking Points:

  • US GDP and the FOMC rate decision this past week has focused rate forecast on data dependence
  • The RBA will weigh on rates again after two cuts this year have generated limited economic response
  • BoE’s first Super Thursday is on tap with both a rate decision and quarterly inflation report due

US Non-Farm Payrolls

The Non-Farm Payroll report, due August 7th, is a highly anticipated market mover in the US Dollar Index. Following a dismal wage growth report that shocked the US Dollar Index, what is expected for the NFPs?

Data Prints to Watch Ahead of NFP

  • Monday August 3rd: US Personal Consumption Expenditure reports inflation change component – the favored price gauge for the FOMC will carry significant rate view weight.
  • Monday August 3rd:US ISM Manufacturing includes a component that weighs the sector’s labor market conditions. The expected figure for July is forecasted to be 53.5
  • Wednesday August 5th:ADP Employment Change will feed market anticipation for Friday’s NFPs and will likely set expectations for the government report.
  • Thursday August 6th:Initial Claims and Continuing Claims are weekly figures but they are frequently referenced for the long-term labor market trend much like the jobless rate.

Bank of England

The Bank of England has taken a hawkish tone in recent months regarding a 25-basis-point rate hike in 2015 after years of maintaining a historically low 0.50% benchmark. Given the BoE is one of very few major central banks contemplating a hike the focus on this combined rate decision and Quarterly Inflation report will be intense.

Data Prints to Watch Ahead of BoE Rate Decision

  • Monday August 3rd: PMI Manufacturing is a monthly survey to measure overall health in the manufacturing sector of the UK economy. As a timely growth proxy, this data may carry more than its expected weight in expectations.
  • Tuesday August 4th: Nationwide House Prices index weighs in on an important economic sector but one that is also referred to frequently as a bubble risk. The housing market often promotes other industries but property prices may also support rising inflationary warnings
  • Thursday August 6th:UK Industrial Production will offer another view of manufacturing sector. Industrial production accounts for a quarter of overall GDP. UK GDP was in line with market estimations last week increasing rate hike possibilities.

Reserve Bank of Australia

The recent commodity rout has caused disruption in the Australian economy. Rate cuts earlier this year have helped to a weaken Australian Dollar, but the Reserve Central Bank (RBA) has stated repeatedly that it believes the exchange rate should be even lower. With the RBA set to announce its monetary policy update on Tuesday morning, will the group surprise with a move for more accommodation in 2015?

Data Prints to Watch Ahead of RBA Rate Decision

  • Sunday August 2nd: AiG Performance of Manufacturing Index provides an assessment of business situation in the manufacturing industry of Australia. The activity gauge dove to a two-year low with the last update.
  • Monday August 3rd: New Home Sales data on a month-by-month basis is a good indicator for the housing market. Like many countries in the developed world, this sector is being monitored closely for its contribution to growth while running the risk of bubble-like conditions.
  • Tuesday August 4th: The Trade Balance economist forecasts currently projects a deficit of –A$2,950M. As one of the lifelines for economic strength through the Great Financial Crisis, trade’s slump combined with China’s managed economic slowdown pose considerable risk.
  • Tuesday August 4th: Retail sales data from Australia is one of the foremost indicator for consumer spending. Domestic spending is increasingly important to offset the closing tap from foreign demand.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.