Macro Weekly look ahead for the week commencing 31st August – 4th September 2020

Tuesday 

AUD

RBA Interest Rate Decision (consensus 0.25%, previous 0.25%) – 05:30 AM BST

The RBA have already previously announced they will be keeping rates near the record low of 0.25%. Although RBA statements have talked down/frowned upon negative interest rates and FX intervention , a deteriorating economic outlook could see this being addressed and discussed more critically.

“The Minutes of the July meeting and the Governor’s speech released on 21st July indicated the door is shut to further policy easing, the Minutes concluding there is no need to adjust the package of policy measures in Australia in the current environment” – TD Securities

GBP

Manufacturing PMI Final (consensus 55.3%, previous 53.3%) – 09:30 AM BST

It is expected PMI figures should hold at 55.3% , however if figures to exceed this, GBP/USD could be prone to even greater rally towards 1.34 , with the support of a broadly weaker dollar index.

“UK data has outperformed and has driven the economic surprise index higher since July. Of course, this is the result of low market expectations rather than real outperformance, as the UK has lagged most G10 counterparts during the pandemic,” – Bipan Rai , CIBC head of FX strategy

USD

Markit Manufacturing PMI Final (consensus 53.6%, previous 50.9%) – 14:45 PM BST

ISM Manufacturing PMI (consensus 54.5%, previous 54.2%) – 15:00 PM BST

A solid PMI reading above 50 would support an economy in expansion and could see slight relief in the dollar index, previous readings came just above the 50% mark

Wednesday

AUD

GDP Growth Rate YoY (consensus -5.3%, previous 1.4 %) – 02:30 AM BST

It is expected GDP growth rate will slip following outbreaks of the virus in states such as Victoria, it is unlikely the RBA will take a dovish stance and announce any meaningful changes to its stance, rather keep the same ‘supportive’ narrative.

US

ADP Employment Change (consensus 900k, previous 167k ) – 13:15 PM BST

Friday

CAD

Employment Change (consensus 275k, previous 418.5k) – 13:30 PM BST

Unemployment Rate (consensus 10.1%, previous 10.9%) – 13:30 PM BST

Though employment change has forecast to slip , Canadian ADP employment change showed that 1.150 million jobs were created in July (versus the 0.95 million expected). I wouldn’t rule out a surprise reading which could see further weakness in the USD/CAD decline.

USD

Non Farm Payrolls (consensus 1400k, previous 1763k) – 13:30 PM BST

Unemployment Rate (consensus 9.8%, previous 10.2%) – 13:30 PM BST

July’s NFP figures came in higher than the expected 1600k forecast , showing perhaps a slightly resilient economy. Though it is important to note the majority of this job gain has been within the services sector which is vulnerable to covid-19 events. Supplemented by this was a lower unemployment rate, coming in at 10.2% versus 10.5%. Positive figures are likely to hinge on the performance of the services sector. Jobless claims remain in the millions and indicate a stressed labor market , though unemployment insurance is decreasing overall.

“Continuing claims continue to drop, but still indicate a highly stressed labor market,” – Jamie Cox, managing partner at Harris Financial Group