Weekly outlook for August 15-19

The high volatility in the financial markets  during last week subsided by the end of the week; this volatility was stem by the news of Standard & Poor’s downgrading the US credit rating from AAA to +AA for the first time in US history. ECB’s intervention in the debit crisis in Europe also helped to stabilize the market. This week there are many news items that could affect the financial markets including, among others, the US TIC long term purchases, preliminary second quarter GDP growth rate in Europe and Japan, Euro Area and US inflation rate, and Japan’s trade balance. Here is an economic news calendar for the week of August 15th to August 19th that highlights the main news items and reports related to U.S, Europe, Australia, Japan and Canada.   

(all times GMT):

  1. Sunday 14th of August 00:50– Japan’s preliminary GDP 2Q2011: Japan’s economy continues to demonstrate contractions as its gross domestic product fell by 0.9% during the first quarter of 2011, and 0.8% during the fourth quarter of 2010. The Tsunami that hit Japan back in March will likely to affect its economic slowdown in second quarter 2011. This news could affect the strength of the Japanese Yen;
  2. Monday 15th of August 14:00 – US TIC long term purchases: The Treasury International Capital report will present the main changes in the purchases and sales of US long term treasuries during June 2011. In the previous report regarding May 2011, the net foreign purchases reached $23.6 billion; the increase in purchases was mainly driven by China. In the upcoming report there might continue to be a rise in purchases. Due to the recent news of the US credit rating downgrade, its likely to have also affected traders to further purchase Treasury bills (see here my last review of May 2011);
  3. Monday 15th of August 2.30 – Monetary Policy meeting Australia’s Bank : The minutes of the monetary policy meeting of the reserve bank of Australia will be published; it shows the main domestic and international factors that affected the board’s decisions on the Bank’s basic interest rate which is at 4.75%; this decision might also affect the AUD/USD and consequently the pricing of major commodities including crude oil (see here last rate decision);
  4. Tuesday 15th of August 10:00– Main Europe’s economy’s GDP 2Q2011 report: Germany will publish this week its preliminary second quarter GDP report. This report will show the changes in the economic growth in Euro Area. According to the recent report in the first quarter of 2011, the Euro Area GDP grew by 0.8% compared with the previous quarter. This news might affect the Euro; there are early expectations of a lower growth rate in the second quarter (see here recent report);
  5. Tuesday 15th of August 13.30 – U.S. Building Permits: The recent report showed an improvement as the adjusted annual rate reached 624,000 building permits in June 2011, which is 2.5% above May’s rate. If this report will continue to show a rise in the building permits rate, it will indicate that the housing market in the US is pulling out of its recession (see here the recent review);
  6. Tuesday 15th of August 13.30 – U.S. Housing Starts: The additional figure to be published by the US Census Bureau involves the US housing starts; this figure was historically correlated with gold price – as housing starts rise gold price usually declined the following day (even when controlling to the US dollar effect); in the last report the adjusted annual rate reached 629,000 in June 2011, which is 14.6% above the May rate of 549,000 (see here the recent review);
  7. Wednesday 17th of August 10:00 – Euro Area CPI and core monthly inflation (June): In the last report regarding June 2011, the annual inflation rate was 2.7%, unchanged compared with May’s for Euro Area; this inflation rate is still above the target inflation of ECB. The expectations in the upcoming CPI report for July 2011 are a slight decline. This news might affect the Euro currency, ECB’s rate decision and consequentially major commodities prices including crude oil and gold (for the full previous report);
  8. Wednesday 17th of August 13.30 – U.S. producer price index news: This monthly report will show the progress in the PPI during July, i.e. the inflation rate from producers stand point. In the previous report regarding June, this index for finished goods declined by 0.4%, after a rise of 0.2% in May; this index declined mainly due to the drop in energy prices by 2.8% during June;
  9. Wednesday 17th of August 15:30 – EIA report about Crude oil inventories: The EIA (Energy Information Administration) will publish its weekly report on the U.S Petroleum market for the week ending on August 12th; last week the US oil stockpiles sharply declined by 10.73 million barrel – the sharpest fall since February 18th, 2011. For the week ending on August 5th crude oil stocks reached 1,796 million barrels (see here the recent crude oil market review);
  10. Wednesday 17th of August 00.50 – Report of Japanese Trade balance : The Japanese trade balance deficit for June 2011 sharply decreased by 57.5% compared with May 2011, to reach 191.152 billion YEN (roughly $2.45 billion) deficit (seasonally adjusted figures). This sharp decrease is mainly due to the sharp increase in exports by 5.4%, while the imports only grew by 0.5% during June. Japan is among the leading importing countries of commodities, such as crude oil and gold; its trade balance could provide insight into Japan’s changes in demand goods and services;
  11. Thursday 18th of August 13:30 – Report on US CPI: This monthly report will show the main changes in the core consumer price index during July. According to the US Bureau of Labor statistics for June 2011, the CPI fell by 0.2% and over the last 12 months by 3.6%. The main reasons for the fall are related to the sharp drop in the energy prices that curbed the inflation pressures;
  12. Thursday 18th of August 13:30 – Department of Labor report – U.S. unemployment claims: For the week ending on August 6th, initial claims decreased by 7,000, as it reached 395,000 claims; the insured unemployment rate fell by 0.1 percent points to 2.9% for the week ending on July 30th; and the number of insured unemployment was 3.688 million, a decrease of 60,000 compared with the previous week’s. (see here my recent review on the US Labor market);
  13. Thursday 18th of August 15:00 – U.S. existing home sales: This report will show the major changes in U.S. existing home sales during July 2011; in the recent report related to June there was a drop in number of homes sold: the seasonally adjusted annual rate reached in June to 4.77 million home sales compared with an annual rate of 4.81 million home sales in May 2011, a 0.8% drop, and an 8.8% decline from the 5.23 million home sales (annual rate) in June 2010 (see here the recent review);
  14. Thursday 18th of August 15:30 – EIA report about Natural gas storage: the natural gas market in the US bounced back last week due to increase in electric sector; the EIA will publish its U.S. natural gas stocks, production and consumption report for the week ending on August 12th. In the recent report, natural gas storage inclined by 0.9% or by 25 Bcf; the natural gas storage inclined to 2,783 billion cubic feet for all lower 48 states – the highest stock level since January 7th, 2011 (see here my recent natural gas storage review);
  15. Friday 19th of August 13.00 – Canadian Core CPI: This report will pertain July 2011 and show the main changes in the core consumer price index, which excludes the most volatile components such as energy, fruit and vegetables. According to the recent Canadian statistics report for June 2011, the CPI rose by 3.1% in 12 month up to June; this is a lower rate than May that recorded a 3.7% growth rate in 12 months. The main reason for this growth is the energy prices that increased by 15.7% during the 12 months up to June 2011.


For further reading:

Previous Reports: