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In the new week, the release of consumer inflation and retail sales in the UK will be published. It is expected that retail sales in August fell, and inflation began to decline again. All these are negative factors for the pound. Market participants also need to take into account that the trade conflict between the US and China this week is likely to intensify. The administration of President Donald Trump plans to announce the introduction of new duties on Chinese goods worth $ 200 billion, and in Beijing, they are discussing retaliatory measures. The increase of trade risks can again provoke the growth of demand for the dollar as a protective asset.
As shown by the US Department of Labor data, published last Friday, the number of jobs outside agriculture in August increased by 201,000, the unemployment rate was 3.9%, and wages in August rose by 2.9% compared with the same month a year earlier (the forecast was 191,000, 3.8%, 2.7%, respectively). The data indicate a high growth in employment and wages, which allows the Federal Reserve to continue raising interest rates at a planned pace. The focus of traders’ attention this week will be meetings of central banks in the UK and the Eurozone, as well as the publication of a number of important macro data for the UK, Australia and the USA.
The focus of traders this week, in addition to the decisions of the central banks of Australia and Canada on interest rates, will be the report on the US labor market for August, which will be released on Friday. Data on the unemployment rate and the number of jobs created outside the agricultural sector (NFP) will be published, but the dynamics of the average hourly wage of Americans will be of greatest interest in the report. The higher the salary, the higher may be the future inflation and the greater the impact this will have on the rhetoric and the actions of the Fed in relation to monetary policy.
Powell’s speech encouraged the bulls of the US stock market and supported the stock indices, which rose on Friday and continued to rise at the beginning of the new week, reaching new record levels. Investors abstracted from foreign trade risks. Two-day talks between the representatives of the United States and China could not fundamentally change the situation after earlier in the week the US and China introduced reciprocal customs duties on goods worth another $ 16 billion, while the total amount of duty-imposed imports reached $ 50 billion on each side. Trade conflicts so far went into the background This week, market participants will also follow the publication of the US GDP data for the second quarter, and inflationary consumer price indices in the Eurozone.
Market participants will follow the economic conference in Jackson Hole, organized by the Federal Reserve. Unexpected statements by management representatives of the world’s largest central banks at this conference can increase volatility in financial markets, which are already in the turbulence zone due to the escalation of international trade conflicts.
This week, investors will follow the publication of the results of the meetings of the central banks of Australia, New Zealand, devoted to monetary policy issues. Market participants will also monitor the publication of data on UK GDP for the 2nd quarter and data from the Canadian labor market for July.
The new week started is full of important events of an economic nature. The focus of the traders’ attention this week will be the meetings of the central banks of Japan, the United States and Great Britain devoted to monetary policy issues, as well as the level of consumer inflation and Eurozone GDP for the second quarter, and data from the US labor market for July, published as always, on the first Friday of the month.
The difference in the monetary policies of the world’s largest central banks and the Fed is still the main fundamental factor in favor of further growth of the dollar against other major currencies-competitors. The focus of traders’ attention this week will be the ECB meeting and publication of the interest rate decision, as well as data on US GDP in the second quarter.
The overall positive dynamics of the dollar and DXY persists amid the Fed’s inclination to further tighten monetary policy and positive macro data, indicating the acceleration of the growth of the US economy. The focus of traders next week will be the publication of the minutes from the last meeting of the RBA, inflationary consumer price indices in the UK, Eurozone, Canada.
In total, over the past week, which was saturated with important events and publications of important macro statistics, the dollar index DXY lost 0.55% or 52 points. The focus of the traders' attention this week will be meetings of the Bank of Canada and its decision on the interest rate, the publication of inflation indicators for Germany, the US, and the publication of the protocol from the June ECB meeting on monetary policy.
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