Financial Market Outlook for July 4-8

The roller-coaster in the financial markets due Brexit vote left the British pound around 10% below its value against the USD before the referendum results came in. And even though equities and bonds also reacted with a “risk-off” sentiment, equities actually recovered after only two days of falls. This week, the focus will remain on Europe and the developments regarding the Brexit. But there are also several reports in the U.S. that could move markets including the minutes of the last FOMC meeting and the NFP report. Other reports and events to consider include: U.S. factory orders, Canada’s employment report, RBA’s cash rate, BOE governor Carney talks, U.S. and German factory orders, GB manufacturing production, and U.S. non-manufacturing PMI. So let’s review the main events for the week of July 4th to 8th.

(All times GMT):

Monday, July 4th

02:30 – Australia’s Retail Sales: In the recent report for May 2016, retail sales rose by 0.2%; this time the market anticipates a gain of 0.3%;

Tuesday, July 5th

05:30 – Reserve Bank of Australia – Cash Rate Statement: In the previous meeting, RBA didn’t change its cash rate, which stood at 1.75%. The RBA isn’t expected to reduce its rates this month;

10:30 – BOE Governor Carney talks: He is expected to hold a press conference about the Financial Stability Report, in London;

15:00 – U.S. Factory Orders: In the last update, factory orders increased by 1.9% during May; currently, the market expectations are for a drop of 0.7% in June;

Wednesday, July 6th

08:00 – German Factory Orders: In the previous report, factory orders decreased by 2% in May; the market estimates that this time factory orders rose by 1.1% in June;

15:00 – U.S. ISM Non-Manufacturing PMI: Back in May, the PMI fell to 52.9, which shows the non-manufacturing sector is growing at a slower rate. But it’s estimated to edge up to 53.5 in the next report – i.e. the non-manufacturing sector is expanding at a slightly faster pace;

19:00 – Minutes of FOMC Meeting: This will be one of the main event of the week that could provide some additional insight behind the FOMC’s discussions; it could also show how important are global economic conditions – which are affected by the Brexit vote — to the Fed’s rate decision;

Thursday, July 7th

01:30 – BOJ Governor Kuroda talks: He will speak at the Branch Managers meeting, in Tokyo;

09:30 – Great Britain Manufacturing Production: This report will present the annual rate of GB’s manufacturing production for May; in the recent report regarding April 2016 the index increased by 2.3%; this time, the estimates are for a drop of 1.4%;

13:15 – ADP estimate of U.S. non-farm payroll: ADP will release its estimate for the next U.S non-farm payroll changes for June 2016 that will be published on Friday;

13:30 – U.S. Jobless Claims Weekly Report:  This weekly report will refer to the developments in the initial jobless claims for the week ending on July 1st; in the last report, jobless claims declined to 268K; in the next report, estimates are for 272K claims;

15:30 – U.S Crude Oil Stockpiles Weekly update: The EIA (Energy Information Administration) will release its weekly report on the U.S oil and petroleum stockpiles for the week ending on July 1st;

16:00 – EIA U.S. Natural Gas Storage: The EIA weekly report of the U.S. natural gas market will refer to the recent changes in natural gas production, storage, consumption and rates as of July 1st;

23:50 – Japan’s Current Account: This report will present the changes in the difference between imported and exported goods, services, and income flows. In the recent update, the surplus in the current account contracted to 1.63 trillion yen and is expected to fall again to 1.52 trillion yen in the next report;

Friday, July 8th

13:30 – Canada’s Employment Report: In the recent employment update regarding May, unemployment edged down to 6.9%; employment grew by 13.8K;

13:30 – U.S. Non-Farm Payroll Update: In the previous employment report only 38K jobs were added – the lowest level in a long time; the U.S. unemployment rate slipped to 4.7%. The next report is expected to show much higher gain (current estimates are at 181K); and wages to keep rising at a monthly rate of 0.2%; if the report falls short of market expectations again, this could have another adverse impact on the U.S. dollar and raise the concerns of a possible economic slowdown in the U.S.;

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