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After the fun of Jackson Hole, the Federal Reserve faces a key week of data. Labour market, inflation and GDP numbers will dictate how the market views the likely course of monetary policy over the coming months.

Nonfarm payrolls

 

The US labour market is centre on Friday with the monthly nonfarm employment change. Despite clear evidence that the tight labour market is not leading to a significant upturn in inflation, the headline nonfarm payrolls numbers remains one of the most closely-watched data releases for the markets and the US dollar in particular.

In July the US economy added 209,000 jobs, ahead of forecasts, while unemployment fell to 4.3%, the lowest since March 2001. Markets are again braced for a strong number but the marginal effect seems to be lesser now that the Fed has shown caution on its assessment of how the labour market strength is translating into inflation. In this light the average earnings number contained in the release continues to have extra significance.

PCE inflation

 

Sticking with the Fed, its preferred measure of US inflation, the personal consumption expenditures (PCE) index, is due on Thursday. This has shown meagre growth this year. The previous release showed the core PCE index was up just 0.1% month-on-month in June, down from 0.2% in May.

GDP reading

 

The second estimate of GDP growth in the second quarter is likely to be another release that has an impact on the dollar. The initial reading showed growth accelerated to 2.6% in the April-June period, more twice the 1.2% pace registered in Q1. However, despite the rise in consumer spending and business investment, wage growth and inflation retreated.

Eurozone inflation

 

Away from the US, the big data event is the Eurozone CPI inflation figures. The equation remains pretty much as it has been all year – robust core inflation would boost the case for the ECB to taper sooner and quicker, while another month of lacklustre price growth will have the bears circle the single currency. Inflation in July was steady at 1.3%, still some way short of the ECB’s 2% target.

 

Economic Calendar

(All times BST)

Monday, 28 August

All day – UK bank holiday, stock market closed for trading

Tuesday, 29 August

00:30 – Japan household spending, unemployment rate

06:00 – Bank of Japan core CPI inflation

07:00 – German GfK consumer climate

07:45 – French preliminary GDP

08:00 – Spanish flash CPI

13:30 – Canada raw materials price index (RMPI)

15:00 – US CB consumer confidence

Wednesday, 30 August

00:01 – UK BRC shop price index

00:50 – Japan retail sales

02:30 – Australia building approvals, construction work done

09:30 – UK net lending to individuals, mortgage approvals

Tentative – UK inflation report hearings

12:00 – German preliminary CPI inflation

13:15 – US ADP non-farm employment change

13:30 – US preliminary GDP Q2 (second reading)

15:30 – US crude oil inventories

Thursday 31 August

00:01 – UK GfK consumer confidence

00:50 – Japan preliminary industrial production

02:00 – China manufacturing and non-manufacturing PMIs

02:00 – New Zealand ANZ business confidence

02:30 – Australia private capital expenditure

07:00 – German retail sales

07:45 – French preliminary CPI inflation

08:55 – German unemployment change

10:00 – Eurozone CPI and core CPI flash estimates

13:30 – Canada GDP Q2

13:30 – US weekly unemployment claims, core PCE price index, personal spending

14:45 – Chicago PMI

15:00 – US pending home sales

Friday, 1 September

02:45 – China Caixin manufacturing PMI

08:15 – Spanish manufacturing PMI

09:30 – UK manufacturing PMI

13:30 – US nonfarm payrolls, average earnings, unemployment rate

15:00 – US ISM manufacturing PMI

Corporate Calendar

 

Tuesday, 29 August

Bunzl (BNZL) – interim results

Wednesday, 30 August

HSS Hire Group (HSS) – interim results

Petrofac (PFC) – interim results

Thursday 31 August

Hays (HAS) – final results

Jimmy Choo (CHOO) – interim results

Ladbrokes Coral Group (LCL) – interim results

 

 

 

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