After sinking to its lowest level since the start of 2015, the US dollar faces a huge test this week as markets look to key CPI inflation data for a signal about where the Federal Reserve could be about to take monetary policy.


US CPI

The big macro economic data comes from the US in the shape of consumer price inflation figures for the last month. The data is a key marker for the US Federal Reserve’s monetary policy as it aims to achieve its inflation target of 2%.

At its last meeting the FOMC noted that it is ‘monitoring inflation developments closely’. This was the first real signal the Fed could be about to blink and is no longer convinced that the strong labour market is enough to get inflation to its target rate. This would chime with the hidden slack we know is in the labour market, which is keeping a lid on wages and therefore inflation.

RBNZ

The Reserve Bank of New Zealand meets on Thursday (Wednesday in Europe) with markets once again expecting no change in rates. But we’re looking for any further commentary from the central bank on the exchange rate after the kiwi rose to its strongest level in more than two years against the US dollar despite inflation in the three months to June falling to zero.

Earnings

Corporate earnings season has peaked but there is no shortage of S&P 500 and FTSE 350 stocks reporting this week. Highlights on Wall Street are the big retailers - JC Penney, Nordstrom and Macy’s; all of which are struggling as they wrestle with the disruptive effect of Amazon on the sector. These earnings reports could make for some interesting reading. Worldpay, PaddyPower Betfair and DFS Furniture are among the highlights in a smattering of FTSE releases this week.

UK manufacturing

For sterling, cable holding around the $1.32 level reached last week will depend on the economic data remaining firm despite all the Brexit uncertainty. This week’s test comes in the shape of Thursday’s official manufacturing production figures and goods trade balance.

Economic Calendar

 (All times BST)

Monday, 7 Aug

04:00 - New Zealand inflation expectations

08:15 - Swiss CPI inflation

08:30 - UK Halifax house price index

09:30 - Eurozone Sentix investor confidence

Tuesday, 8 Aug

Tentative - China trade balance

00:01 - UK BRC retail sales monitor 

02:30 - Australia NAB business confidence

15:00 - US Jolts job openings

Wednesday, 9 Aug

Tentative - UK inflation report hearings

02:30 - China CPI and PPI inflation

07:00 - Japan preliminary machine orders

07:45 - French government budget balance

09:00 - Italian industrial production

13:30 - Canada building permits

13:30 - US preliminary nonfarm productivity, unit labour costs

15:30 - US crude oil inventories

22:00 - Reserve Bank of New Zealand official cash rate, rate statement

23:00 - RBNZ press conference

Thursday, 10 Aug

00:01 - UK RICS house price balance

00:50 - Japan core machinery orders, PPI inflation

07:45 - French industrial production

09:30 - UK manufacturing production, goods trade balance

13:30 - US PPI inflation, weekly unemployment claims

Friday, 11 Aug

07:00 - German final CPI inflation

07:45 - French final CPI inflation

13:30 - US CPI and core CPI inflation

 

Corporate Calendar

Tuesday, 8 Aug

Worldpay Group (WPG) - Interim results, EPS estimate 0.053

PaddyPower Betfair (PPB) - Interim results

Morgan Sindall Group (MGNS) - Interim results

TP ICAP (TCAP) - Interim results

Bellway (BWY) - Trading update

Pets at Home Group (PETS) - Trading update

 

Wednesday, 9 Aug

Mylan NV (MYL) - Q2/2017, EPS estimate 1.171

G4S (GFS) - Interim results

Legal & General Group (LGEN) - Interim results

 

Thursday, 10 Aug

Macy’s (M) - Q2/2018, EPS estimate 0.449

Nordstrom Inc (JWN) - Q2/2018, EPS estimate 0.634

Snap Inc (SNAP) - Q2/2017, EPS estimate -0.149

DFS Furniture (DFS) - Final results

Amec Foster Wheeler (AMFW) - Interim results

Coca-Cola European Partners (CCE) - Interim results

Prudential (PRU) - Interim results

TUI Travel (TT) - Q3/2017

 

Friday, 11 Aug

JC Penney Co Inc (JCP) - Q2/2018, EPS estimate -0.040

 

 

Source: Bloomberg

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