Economic calendar: NFP and PMIs to signal a gradual global recovery as Q3 starts
- The economic calendar will be fairly busy as the third quarter starts.
- The most important numbers will be US employment data and Chinese manufacturing and services PMI data.
- Riksbank will be the only central bank to deliver interest rate decision this week.
The US dollar rose while global stocks and crude oil declined last week as fears of a second wave became real. The US has reported more than 200,000 new cases while the CDC has warned that the numbers are significantly higher. The greenback’s rise was mostly due to risk aversion as traders rushed to its safety. Let us look at key events to watch in the economic calendar as the third quarter starts.
US Nonfarm payrolls
On Thursday, the Bureau of Labour Statistics (BLS) will release the official nonfarm payrolls data. The numbers will come on Thursday, instead of its usual Friday because of the June 4 holiday. Analysts expect that the economy created more than 3 million jobs in June after creating 2.5 million in May. They also see the unemployment rate falling to 12% from 13.3%. A stronger jobs report will signal that the recovery is stronger than what most people were expecting. That is according to Kevin Cummings, an analyst at NatWest:
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“If it’s stronger, it will suggest that the improvement is quicker, and that’s kind of what we saw in May with better retail sales, confidence was coming back a little and auto sales were better.”
Riksbank will be the only major central bank to deliver its interest rate decision this week. The decision will come at a time when the Swedish krone has gained by more than 3% in the past 30 days. According to ING, most analysts expect the bank to leave interest rates unchanged. Instead, they will continue their coronavirus response to quantitative easing. The analysts also predict that the bank will follow the footsteps of Norges bank, which signalled a modest rate hike in the future. They said:
“Should this be the case, the SEK reaction should be positive but as was the case for NOK it should be a one-off as such, a soft guidance on easing would be theoretical and not imminent.”
The fifth round of Brexit talks will start tomorrow in Brussels. In this round, negotiators will focus on key issues such as fisheries, goods and services trading, and security issues. Still, there is minimal likelihood that the two sides will make any progress.
In a statement on Friday, David Frost, the UK chief negotiator, said that the UK will not request an extension on Tuesday. He also rejected to some of the ideas proposed by the EU. For their part, EU negotiators have cautioned the UK about the risks to a no-deal Brexit agreement. Michel Barnier has pointed to the amount of trade the UK does with the European Union.
The economic calendar will be relatively quiet. We will receive the Q1 GDP data and June manufacturing and services PMI numbers. We will also listen to a speech by Andrew Bailey.
Analysts will watch global PMIs released by Markit this week. On Tuesday, China Logistics will release the manufacturing and non-manufacturing PMI numbers. Analysts polled by Bloomberg expect the manufacturing PMI to ease slightly to 50.4 from the previous 50.6. The following day, Caixin and Markit will release the country’s PMI data, which is expected to decline from 50.7 to 50.5. The Chinese PMI numbers are essential because the country is the biggest manufacturer in the world.
We will also watch out for the PMI numbers from China, Japan, eurozone, and the United States.
Other data to watch in the economic calendar
Other key numbers to watch in the economic calendar this week are eurozone’s inflation, pending home sales in the US, and Japan manufacturers index. We will also receive the German employment numbers, crude oil inventories, and Canadian trade data.