Market participants are trying to predict if the US Fed will lower interest rates at its meeting in September. Many experts believe there’s a nearly 100% chance of a rate cut. Economists are now speculating on the magnitude of the interest rate reduction by the end of the year, focusing on assessing the inflation rate. Nonetheless, the robust labor market, thriving business activity, and steady GDP growth in the US may mitigate the necessity for a substantial interest rate cut by the Fed.
In the upcoming week, market participants will monitor the release of the US manufacturing and services PMIs. The week will end with the publication of fresh data from the US labor market on Friday.
Thus, the events of this week, along with the release of the ISM and US Labor Department reports and the upcoming publication of fresh US inflation data next week, may play a crucial role in the Fed policymakers’ decision-making process during their September 17– 18 meeting when determining an interest rate.
Besides, in the upcoming week, 02.09.2024 – 08.09.2024, the publication of macro data on China, Switzerland, Australia, Germany, the eurozone, and the results of the Bank of Canada meeting are expected.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: China manufacturing PMI.
- Tuesday: US ISM manufacturing PMI.
- Wednesday: Bank of Canada’s interest rate decision.
- Thursday: ADP and US ISM services sector PMI report.
- Friday: US labor market data.
- Key event of the week: US Department of Labor report with August data.
Monday, September 2
Labor Day is celebrated in the USA and Canada, and on this day, banks and stock exchanges in these countries are closed. As a result, trading volumes during the US trading session are expected to be lower than usual.
01:45 – CNY: Caixin China Manufacturing PMI
The Caixin Purchasing Managers’ Index (PMI) is a leading indicator of China’s manufacturing sector. As the world’s second-largest economy, China’s release of significant macroeconomic data may strongly influence the financial market.
Previous values: 49.8, 51.8, 51.7, 51.4, 51.1, 50.9, 50.8, 50.8, 50.7, 49.5, 50.6, 51.0, 49.2, 50.5, 50.9, 49.5, 50.0, 51.6, 49.2 in January 2023.
A decline in the indicator value and reading below 50 may negatively affect the renminbi, as well as commodity currencies such as the New Zealand and Australian dollar. Data that exceeds forecasted or previous values will have a positive impact on these currencies.
Tuesday, September 3
06:30 – CHF: Consumer Price Index
The consumer price index (CPI) reflects the retail price trends for a group of goods and services comprising the consumer basket. The CPI is a key gauge of inflation. Additionally, the index has a significant impact on the value of the Swiss franc.
In July, consumer inflation rose +1.3% YoY but dropped -0.2% MoM, following 0% (+1.3% YoY) in June, +0.3% (+1.4% YoY) in May, +0.3% (+1, 4% YoY) in April, 0% (+1.2% YoY) in February, +0.2% (+1.3% YoY) January 2024, +1.7% in December 2023, +1.4% in November, and +1.7% YoY in October.
An index reading below the forecasted or previous value may weaken the Swiss franc, as low inflation will force the Swiss Central Bank to ease its monetary policy. Conversely, a high reading would be positive for the Swiss franc.
14:00 – USD: US ISM Manufacturing Purchasing Managers’ Index
The US PMI published by the Institute for Supply Management (ISM) is an important measure of the US economy. When the index surpasses 50, it bolsters the US dollar, whereas readings below 50 have a detrimental effect on the greenback.
Previous values: 46.8, 48.5, 48.7, 49.2, 50.3, 47.8, 49.1 in January 2024, 47.4 in December, 46.7 in November, 46.7 in October, 49.0 in September, 47.6 in August, 46.4 in July, 46.0 in June, 46.9 in May, 47.1 in April, 46.3 in March, 47.7 in February, 47.4 in January 2023.
The index reading is again below the 50 level, indicating a slowdown in this sector of the US economy. The growth of index values supports the dollar. Conversely, if the index reading falls below the forecasted values or below 50, the US dollar may sharply depreciate in the short term.
Wednesday, September 4
01:30 – AUD: Australian GDP for Q2
The Australian Bureau of Statistics releases its report on the country’s GDP for Q2 2024. GDP is a key indicator of the Australian economy’s health. A strong report will bolster the Australian dollar, while a weak GDP report will drag the currency down.
Previous values: +0.1% (+1.1% YoY) in Q1 2024, +0.2% (+1.5% annualized) in Q4 2023, +0.2% (+2.1% YoY) in Q3, +0.4% (+2.1% YoY) in Q2, +0.2% (+2.3% YoY) in Q1 2023, +0.5% (+2,7% YoY) in Q4, +0.6% (+5.9% YoY) in Q3, +0.9% (+3.6% YoY) in Q2, +0.8% (+3.3% YoY) in Q1, +3.4% (+4.2% YoY) in Q4, -1.9% in Q3, +0.7% in Q2, +1.8% in Q1 2021. A higher reading is positive for the Australian dollar, while a lower reading is negative. If the data falls short of the forecast, the currency may decline.
01:45 – CNY: Caixin China Services PMI
The Caixin Purchasing Managers’ Index (PMI) is a leading indicator of China’s services sector. Since China’s economy is the second largest in the world, the release of its significant macroeconomic indicators can profoundly influence the overall financial market.
Previous values: 52.1, 51.2, 54.0, 52.5, 52.7, 52.5, 52.7 in January 2024, 52.9, 51.5, 50.4, 50.2, 51.8, 54.1, 53.9, 57.1, 56.4, 57.8, 55.0, 52.9 in January 2023.
Although an index value above 50 indicates growth, a relative decline in the indicator may adversely affect the yuan quotations. Since China is the most important trade and economic partner of Australia and New Zealand, a deterioration in Chinese macro data may negatively impact the Australian and New Zealand dollars. Conversely, an increase in Chinese macro figures is usually positive for these currencies.
13:45 – CAD: Bank of Canada’s interest rate decision and accompanying statement
At its 2022 and 2023 meetings, the Bank of Canada raised its interest rate and advocated for further increases. Since its September 2023 meeting, Canadian policymakers have held the interest rate at 5.00%, assuming that uncertainty caused by high geopolitical tensions around the world and slowing Chinese, American, and European economies will be accompanied by lower demand for oil. As oil is Canada’s primary export commodity, this situation may weaken its economic growth while grappling with high inflation.
However, at the June 05, 2024 meeting, the Bank of Canada reduced the interest rate by 0.25% to 4.75% and then to 4.50% for the first time since July 2023. The central bank’s upcoming decision remains uncertain. The regulator may also take a pause at Wednesday’s meeting.
If the Bank of Canada’s accompanying statement regarding growing inflation and the prospects for further monetary policy signals further tightening, the Canadian dollar will strengthen. Conversely, if the regulator signals the need for a monetary policy easing, the Canadian currency will decline.
Thursday, September 5
01:30 – AUD: Balance of Trade
Balance of Trade is an indicator that measures the ratio between exports and imports. An increase in Australian exports leads to a larger trade surplus, positively affecting the Australian dollar. Previous values (in billion Australian dollars): 5.589 in July, 5.773 in June, 6.548 in May, 5.024 in April, 7.280 in March, 11.027 in February, 10.959 in January, 11.437 in December, 7.129 in October, 6.184 in September, 10.161 in August, AUD 7.324 in July, AUD 10.268 billion in June, 10.497 in May, 10.454 in April, 14.974 in March, 14.129 in February, 10.963 in January 2023. A decrease in the trade surplus could negatively affect the Australian dollar, while an increase in the indicator figure may bolster the currency.
02:00 – AUD: Statement by Michele Bullock, the RBA Governor
Michele Bullock will assess the current state of Australia’s economy and outline her department’s monetary policy. Market participants anticipate her insights on the central bank’s policies amid global recessionary trends and elevated inflation levels in Australia.
Any signals regarding her plans to adjust the RBA’s monetary policy parameters will cause a sharp surge in the Australian currency and stock market volatility. If the Australian Central Bank Governor avoids discussing monetary policy, the market response will be muted.
09:00 – EUR: Eurozone retail sales
Retail sales data is the main measure of consumer spending, indicating the change in the sales volume in the retail industry. A high indicator result strengthens the euro, while a low one weakens it.
Previous values: -0.3% (-0.3% YoY), +0.1% (+0.3% YoY), -0.5% (0% YoY), +0.8% (+0.7% YoY), -0.5% (-0.7% YoY), +0.1% (-1.0% YoY) in January 2024, -1.1% (-0.8% YoY) in December, -0.3% (-1.1% YoY) in November, +0.1% (-1.2% YoY) in October, -0.3% (-2.9% YoY) in Sept, 1.2% (-2.1% YoY) in August, -0.2% (-1.0% YoY) in July, -0.3% (-1.4% YoY) in June, 0% (-2.4% YoY) in May, -1.2% (-2.9% YoY) in April, -0.8% (-3.3% YoY) in March, +0.3% (-2.4% YoY) in February, -2.7% (-1.8% YoY) in January, +0.8% (-2.8% YoY) in December 2022.
The data suggests that retail sales have not returned to pre-pandemic levels after a severe drop in March–April 2020, when Europe was under strict quarantine measures, and are periodically declining again. Nevertheless, values exceeding the forecast will strengthen the euro.
12:15 – USD: ADP Private Sector Employment Report
The ADP report on private sector employment significantly impacts the market and the US dollar. An increase in this indicator value positively affects the greenback. The number of workers in the US private sector is expected to increase again in August after rising by 122,000 in July,155,000 in June, 157,000 in May, 188,000 in April, 208,000 in March, 155,000 in February, 111,000 in January 2024, 158,000 in December, 104,000 in November, 111,000 in October, 137,000 in September, 135,000 in August, 307,000 in July, 543,000 in June, 206,000 in May, 293,000 in April, 103,000 in March, 275,000 in February, 131,000 in January 2023.
The growth of the index values may positively affect the US dollar while law index readings adversely. A negative market reaction and a potential decline in the dollar may occur if the data turns out to be worse than forecasted.
The ADP report is not directly correlated with the official data of the US Department of Labor, which is due on Friday. However, the ADP report often serves as a forerunner of the department’s data and significantly influences the market.
14:00 – USD: US ISM Services Purchasing Managers’ Index
The PMI assesses the state of the US services sector, accounting for about 80% of US GDP. The share of material goods production is about 20% of GDP, including 1% for agriculture and 18% for industrial production. Therefore, the publication of the services sector data significantly impacts the US dollar. An indicator reading above 50 is positive for the currency.
Previous values: 51.4 in July, 48.8 in June, 53.8 in May, 49.4 in April, 51.4 in March, 52.6 in February, 53.4 in January 2024, 50.5 in December, 52.5 in November, 51.9 in October, 53.4 in September, 54.5 in August, 52.7 in July, 53.9 in June, 50.3 in May, 51, 9 in April, 51.2 in March, 55.1 in February, 55.2 in January 2023, 49.6 in December, 56.5 in November, 54.4 in October, 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February, 59.9 in January 2022.
The growth of index values will favorably affect the US dollar. However, a relative decline in the index values and readings below 50 may negatively affect the US dollar in the short term.
Friday, September 6
09:00 – EUR: Eurozone GDP for Q2 (Final Estimate)
GDP is a measure of the general economic condition. A rising GDP trend is positive for the euro, while a low result weakens it.
The latest Eurozone macro data suggests a gradual recovery in the European economy’s growth rate after a sharp slump in early 2020.
Previous values: +0.3% (+0.4% YoY) in Q1 2024, 0% (+0.1% YoY) in Q4 2023, -0.1% (0% YoY) in Q3, +0.1% (+0.5% YoY) in Q2, -0.1% (+1.0% YoY) in Q1 2023, 0% (+1.9% YoY) in Q4 2022, growth of +0.7% (+4,0% YoY) in Q3, +0.8% (+4.1% YoY) in Q2 2022, +0.6% (+5.4% YoY) in Q1, +0.3% (+4.6% YoY) in Q4, +2.2% (+3.9% YoY) in Q3, +2.2% (+14.3% YoY) in Q2, and a decline of -0.3% (-1.3% YoY) in Q1 2021.
If the data proves to be lower than the forecasted and/or previous values, the euro may decline. Conversely, data that exceeds expectations could bolster the euro in the short term. Achieving a full recovery of the European economy, possibly even returning to pre-crisis levels, remains a distant prospect.
The first and second estimates stood at +0.3% (+0.6% YoY).
12:30 – CAD: Canada Unemployment Rate
Statistics Canada will release the country’s August labor market data. Since 2020, unemployment has risen in Canada. Massive business closures due to the coronavirus and layoffs have also contributed to the unemployment rate, increasing from the usual 5.6%–5.7% to 7.8% in March and 13.7% in May 2020.
In July 2024, unemployment stood at 6.4% against 6.4% in June, 6.2% in May, 6.1% in April and March, 5.8% in February, 5.7% in January 2024, 5.8% in December and November 2023, 5.7% in October, 5.5% in September, August, and July, 5.4% in June, 5.2% in May, 5.0% in April, March, February, January, December, 5.1% in November, 5.2% in October and September, 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022.
If the unemployment rate continues to rise, the Canadian dollar will depreciate. If the data exceeds the previous value, the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the Canadian dollar, while an increase is a negative factor.
12:30 – USD: Average Hourly Earnings. Private Nonfarm Payrolls. Unemployment Rate
The most significant US labor market indicators for August.
Previous values: +0.2% in July, +0.3% in June, +0.4% in May, +0.2% in April, +0.3% in March, +0.1% in February, +0.6% in January 2024, +0.4% in December and November 2023, +0.2% in October, September, and August, +0.4% in July and June, +0.3% in May, +0.5% in April, +0.3% in March, +0.2% in February, +0.3% in January 2023 / +114,000 in July, +179,000 in June, 216,000 in May, +108,000 in April, +310,000 in March, +236,000 in February, +256,000 in January 2024, +290,000 in December 2023, +182,000 in November, +165,000 in October, +246,000 in September, +210,000 in August 2023, +210,000 in August 2023 / 4.3% in July, 4.1% in June, 4.0% in May, 3.9% in April, 3.8% in March, 3.9% in February, 3.7% in January 2024, December and November 2023, 3.9% in October, 3.8% in September and August, 3.5% in July, 3.6% in June, 3.7% in May, 3.4% in April, 3.5% in March, 3.6% in February, 3.4% in January 2023.
Overall, the values are positive. Nevertheless, it is often difficult to predict the market’s reaction to the data release, given that many previous figures can be revised. This task becomes even more challenging now due to the contradictory economic situation in the US and many other large economies with the looming risk of recession alongside persistently high inflation.
Regardless, the release of the US labor market data is anticipated to prompt increased volatility not just in the US dollar but also in the entire financial market. Most risk-averse investors will probably prefer to stay out of the market during this period.
Price chart of USDCAD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.
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