Weekly Outlook of Financial Markets for July 30- August 3

During last week the Euro and commodities prices started off falling but by the second part of the week they have changed direction and rallied. The pledge of ECB President to preserve the Euro did the trick. Now it will remain to be seen if the ECB will take the steps needed to do just that. The low growth of the U.S GDP didn’t affect the markets but may affect FOMC members who will convene this week for the fifth time in 2012 to decide on the FOMC’s monetary policy. If there will be even just a whiff of QE3, this could pull up commodities up and drag the USD down. This week the ECB and MPC will also decide on each respective interest rate. Other important publications and reports that may affect the financial markets this week include: U.S non0farm employment report, China’s manufacturing PMI, U.S manufacturing PMI, Spain’s GDP, Euro Area inflation, Australia’s trade balance, Canada’s GDP and U.S. jobless claims. Here is an economic news calendar outlook for July 30th to August 3rd regarding the U.S., EU, China, Australia, GB and Canada.   

(All times GMT):

Monday, July 30th

08:00 – First Spanish GDP 2Q 2012 Estimate: This will be the first estimate of Spain’s second quarter 2012 real GDP growth. In the recent estimate Spain’s GDP contracted by 0.3%; in the 4Q2011 the GDP growth rate reached 0.3%. If there will be a sharp shift in the growth rate from Q1 to Q2 this could affect not only the Euro but also commodities prices. This could also influence ECB monetary policy;

Tentative – Italian 10 Year Bond Auction: the Italian government will issue another bond auction; in the previous bond auction, which was held at the mid of July, the average yield reached 5.82%;

Tuesday, July 31st

07:00 – German Retail Sales: This monthly report will analyze the developments in German retail sales during July. In June 2012, retail sales decreased by 0.3%; if this report will continue to be negative then it might weaken the Euro;

10:00 – Euro Area Flash Estimate of Annual Inflation: the inflation in Euro Area reached 2.4% in June. If the upcoming inflation rate estimate will change direction and rise, it may lower the chances of ECB cutting its interest rate;

10:00 – Euro Area unemployment rate: the rate of unemployment of the Euro Area reached 11.1% in May. This mean there wasn’t any significant change in the unemployment. If in the upcoming report there will be, it could affect the Euro;

13:30 – Canada’s GDP by Industry: the report will present the changes in major industrial sectors for May 2012. In the previous report regarding April 2012, the real gross domestic product rose by 0.3%. This report may affect the strength of the Canadian dollar exchange rate which is strongly correlated with commodities rates;

15:00 – U.S Consumer Confidence: according to the latest monthly update, the consumer confidence index decreased in June (M-o-M). The current expectations are that the May index may decline again; this report might affect commodities markets including the natural gas market;

2:00– China Manufacturing PMI: according to the previous Manufacturing PMI report regarding June 2012 the Manufacturing PMI edged down to 50.2; this index indicates the developments in China’s manufacturing sectors; if this downward trend will keep on, this may adversely affect commodities prices;

Wednesday, August 1st

14:00 – Spanish Flash Manufacturing PMI: This report will refer to the monthly developments in Spain’s manufacturing sector. According the previous report the index declined to 41.1%, which means the manufacturing is contracting at a faster pace;

09:30 – GB Manufacturing PMI: This report will refer to Great Britain’s manufacturing sector status in July 2012. In the previous report regarding June 2012 the index rose to 48.6%. This rate means the manufacturing sector is contracting at a slower pace; this index might affect GB Pound;

13:15 – ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the upcoming U.S non-farm payroll change during July 2012 in anticipation for the upcoming no-farm report to be published by Friday;

15:00 – U.S. ISM Manufacturing PMI: This report will refer to the monthly developments in the manufacturing sector on a national level during July 2012. During June 2012 the index tumbled down to 49.7%, which means the manufacturing is contracting; this index might affect forex, crude oil and natural gas markets;

15:30 – U.S Crude Oil Stockpiles Report: the EIA (Energy Information Administration) will come out with its weekly report on the U.S oil and petroleum stockpiles for the week ending on July 27th; in the recent weekly update for July 20th, stockpiles rose by 10.1 million bl to 1,808 million bl;

19:30 – FOMC Meeting (Statement): The FOMC will convene for the fifth time this year and will decide at the end of two day of meeting its interest rate and monetary policy; Following the testimonies of Bernanke at the Hill and the minutes of last month’s FOMC meeting, it seems as if there won’t be any substantial changes in the upcoming FOMC meeting. On the other hand, the recent appreciation of the USD, the low growth rate in employment and GDP for Q2 are probably pulling the odds up of another QE in the horizon. I think the FOMC won’t announce of another stimulus plan in this upcoming meeting. The FOMC statement may affect the US dollar and more than that it will affect gold and silver prices; I speculate if there won’t any announcement of QE3 or any hints of the Fed moving toward this direction in the near future, gold and silver prices are likely to decline; if the FOMC will consider another stimulus plan it could pull up bullion;

2:30 – Australian Trade Balance: The upcoming report will refer to June 2012. In the recent report, the seasonally adjusted balance of goods and services expanded from a deficit of $26 million in April 2012 to a $285 million deficit in May 2012. The export of non-monetary gold rose by $185 million (15%); if the gold exports will continue to rise June, it might suggest an increase in demand for non-monetary gold (see here last report);

Thursday, August 2nd

12:00 – Great Britain Bank Rate & Asset Purchase Plan: Bank of England will decide on its basic rate for August 2012 and the progress of its asset purchase plan; as of July the BOE’s rate remained flat at 0.5% but raised the asset purchase plan by £50 billion to £375 billion;

12:45 – ECB Press Conference and Euro Rate Decision: In previous interest rate decision the President of ECB, Mario Draghi reduced the EU interest rate by 0.25pp to 0.75%; the recent deprecation of the Euro may affect the upcoming ECB rate decision; if ECB will change again the rate, it may affect the Euro to US dollar exchange rate;

13:30 – U.S. Jobless Claims Weekly Report:  this update will refer to the weekly changes in the initial jobless claims for the week ending on July 27th; in the latest update the jobless claims fell by 35k to 353,000; this upcoming weekly report may affect the U.S dollar and consequently commodities prices;

15:00 – U.S Factory Orders: This report will refer to the changes in U.S. factory orders of manufactured durable goods during June; this report will offer some insight to the growth of the U.S economy and could affect the direction of the U.S dollar;

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly update of the U.S. natural gas market will refer to the latest shifts in natural gas production, storage, consumption and price as of July 27th; in the previous weekly update, natural gas storage increased by only 26 Bcf to 3,189 Bcf;

Friday August 3rd

13:30 – U.S. Unemployment Rate & Non-Farm Payroll Report: in the recent report regarding June 2012, the labor market didn’t expand much as it did during the first few months of 2012: the number of non-farm payroll employment rose by only 80k; the U.S unemployment rate remained 8.2%; if the upcoming report will continue to show low growth of below 100 thousand (in additional jobs), this may raise the chances of the Fed introducing additional stimulus plan in 2012; this report might affect not only the U.S dollar, but also commodities prices (see here my last review on the U.S employment report).

15:00 – U.S. ISM Non-Manufacturing PMI: This report will refer to the developments in the non-manufacturing sector during July 2012. During June 2012 this index edged down to 52.1% – this still means the non-manufacturing is expanding and at a slightly slower pace than before; this index may affect forex and commodities trading;

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