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The Bank of England provides the main set piece for the forex market as traders bet it will raise rates by another 50bps, though a sharp fall in headline inflation has increased the chance the MPC votes for a smaller hike. Australia’s reserve bank is also anticipated to raise rates. Nonfarm payrolls from the US will be crucial for how the market views the US economy and what the Fed might do next. Earnings season continues apace with Apple the highlight in another busy week for Wall Street.

 

Here are the week’s key events:

Monday

The week kicks off with the official manufacturing and services PMI data for China. Manufacturing activity shrank for a third straight month in June, whilst the services number showed the weakest pace of expansion this year, suggesting economic momentum remains weak. Flash Eurozone CPI inflation data is also on the watchlist in the wake of last week’s ECB decision. Traders will be mindful of further cooling after Euro area annual inflation was 5.5 % in June 2023, down from 6.1 % in May 2023.

Earnings: Arista Networks (ANET)

 

Tuesday

The Reserve Bank of Australia (RBA) is expected to raise interest rates by 25 basis points to 4.35%, having paused its hiking cycle in July. Inflation remains too high for policymakers and there is broad consensus that it will seek at least one more increase. In the US, the ISM manufacturing survey will be closely watched, particularly the prices component. JOLTS job openings are also of note ahead of Friday’s nonfarm payrolls release.

Earnings: Caterpillar (CAT), Merck & Co (MRK), Pfizer (PFE), Advanced Micro Devices (AMD), Airbnb (ABNB), MicroStrategy (MSTR), Pinterest (PINS), Starbucks (SBUX), Uber (UBER), Virgin Galactic (SPCE), Fresnillo (FRES)

 

Wednesday

Quietish day for eco data – watch the BoJ meeting minutes for signs of movement on yield curve control and the ADP employment numbers. The focus will be on earnings with Qualcomm of interest after its tie-up with Meta on rolling out AI models on phones and PCs next year. Qualcomm says the technology will enable applications like intelligent virtual assistants and investors will be keen to get a read on what this might mean for earnings in future. And there is further UK housing market interest with results from Taylor Wimpey.

Earnings: Kraft Heinz (KHC), Etsy (ETSY), Occidental Petroleum (OXY), PayPal (PYPL), Qualcomm (QCOM), Shopify (SHOP), Smurfit Kappa (SKG), Direct Line (DLG), Taylor Wimpey TW.), ConvaTec (CTEC)

 

Thursday

Slowing inflation has left markets betting that the Bank of England may opt to hike interest rates by just 25bps, having previously been set on the monetary policy committee opting for another jumbo 50bps move. Headline CPI inflation has retreated to 7.9%, almost a full percentage point lower than in May. However, core inflation remains far too high for comfort at 6.9%. Gilt yields have moved sharply lower since the inflation report and sterling retreated – a 50bps hike would send a hawkish signal. Elsewhere traders are watching the weekly unemployment claims data from the US and the ISM services PMI. China’s Caixin services PMI is the highlight in the Asian session. Apple earnings will be the main event on Wall Street.

Earnings: Alibaba (BABA), AMC Entertainment (AMC), Moderna (MRNA), Apple (AAPL), Block (SQ), Coinbase (COIN), Rolls-Royce (RR.), Smith & Nephew (SN.), Hikma (HIK)

 

Friday

Asian session highlights include the RBA monetary policy statement after the rate decision earlier in the week and the RBNZ Statement of Intent. Swiss CPI inflation and German factory orders kick off the European session but it’s the US nonfarm payrolls that is the main event at the end of the week. The headline NFP was a miss last month, with the 209k new jobs created the weakest since Dec 2020, but overall indicators don’t point to many cracks in the labour market. Wages are also still quite strong. 

Earnings: WPP (WPP)

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