Financial Market Forecast for August 25-29

This week, the main U.S economic reports to be release are the GDP for the second quarter and the PCE. The core durable goods, consumer confidence and consumer sentiment will also be out during the week and may impact the financial markets. Also, a couple of housing figures will come out such as new and pending home sales. In Europe, the main reports will revolve around the flash CPI for EU. The monetary development, EU employment, German business climate and retail sales will also be released. In Canada, its GDP monthly update will be published. So let’s break down the economic outlook for the week of August 25th to 29th.

(All times GMT):

Monday, August 25th

09:00 – German Ifo Business Climate Index: This index consists of the changes (on a monthly basis) in the manufacturers, builders, wholesalers, and retailers in Germany as of August. In the last report regarding July 2014, the business climate index declined to 108;

15:00 – U.S. New Home Sales: This report will refer to July 2014; in the last report (opens pdf; for June), the sales of new homes rose to an annual rate of 406,000 – nearly 20% drop (month-over-month); if the number of home sales continues to pull back, this may suggest the housing market in the U.S is cooling down;

Tuesday, August 26th

13:30 – U.S Core Durable Goods: This monthly report regarding July will indicate the developments in U.S demand for commodities including oil and gas. As of June 2014, new orders of manufactured durable goods slipped to $242.3 billion – a 1.7% gain compared to May; if this report shows additional growth in new orders, then it could pull up not only the USD but also commodities;

15:00 – U.S Consumer Confidence: According to the last report for July, the consumer confidence index rose to 90.9, which suggests the consumer spending is picking up;

Wednesday, August 27th

09:00 – GfK German Consumer Climate: In the previous monthly update, the index inched up to 9. If the index continues to slowly rise, this could suggest the German economy keeps improving;

15:30 – U.S Crude Oil Stockpiles Weekly Report: The Energy Information Administration will release its weekly update on the U.S oil and petroleum stockpiles for the week ending on August 22nd;

02:30 – Australia Private New Capital Expenditure: This quarterly report shows the changes in the private new capital expenditures and expected expenditures for the second quarter of 2014. As of the previous quarter, the seasonal adjusted total of new capital expenditure declined again by 4.2% (Q-o-Q). If capital expenditures continue to drop, this trend may adversely affect the Aussie dollar;

Thursday, August 28th

Tentative – Germany’s Preliminary CPI: In the last CPI report for July 2014, the CPI edged up by 0.3%;

08:55 – Germany’s Unemployment Update: In the previous unemployment update for July 2014, unemployment fell by 12K. The next report might impact the Euro;

09:00 – Euro Area Monetary Development: This monthly update will refer to the changes of the M3, M1 and loans to private sector in the Euro area as of July 2014. In the previous June report, the annual growth rate for M3 increased to 1.5%; M1 also rose to 5.3%. Finally, the annual growth rate of loans to private sector slipped to -1.7%. This news suggests the EU inflation is slowly picking up as the growth rate of M1 increased, and loans continue to shrink but at a slower pace;

13:30 – Second U.S GDP 2Q 2014 Estimate: This will be the second estimate of U.S’s second quarter 2014 real GDP growth. In the first estimate the GDP grew by 4.1%, which was a lot better than in the first quarter. Back then the U.S GDP fell by 2.1%. The current estimates are that the GDP won’t change much and inch down to 3.9%. If the US gross domestic product continues to pick up, this could positively affect not only the US dollar but also commodities prices;

13:30 – U.S. Jobless Claims Weekly Report: This weekly report will refer to the shifts in the initial jobless claims for the week ending on August 22nd; in the last report the jobless claims fell to 298K;

15:00 – U.S Pending Home Sales: This report shows the changes in pending home sales in the U.S during July; in the previous update for June, pending home sales index decreased by 1.1% (month-over-month). This report is another signal for the progress of the U.S housing market; if the index keeps falling, it may negatively impact the U.S dollar;

15:30 – EIA U.S. Natural Gas Storage: The EIA weekly report of the U.S. natural gas market will refer to the latest shifts in natural gas production, storage, consumption and prices as of August 22nd;

Friday, August 29th

07:00 – Germany’s Retail Sales: In the latest report for July 2014, retail sales rose by 1.3%;

08:00 – KOF Economic Barometer: This report projects the progress of the Swiss economy in the coming months;

10:00 – EU CPI Flash Estimate: This index estimates the annual consumer price index of the Euro Area. According to the last estimate for July, the annual CPI inched down to 0.4%, which is still well below the ECB’s target inflation of 2%. If the inflation rate doesn’t pick up, this could indicate the EU economy isn’t heating up. These developments could influence the ECB members with respect to ECB’s future cash rate decisions;

10:00 – EU Unemployment Rate: Last month’s update presented that the rate of unemployment edged down again to 11.5%. This means the labor market in the Euro Area is only slowly progressing;

13:30 – Canada’s GDP by Industry: This monthly report presents the developments in major industrial sectors for June 2014. In the last update regarding May 2014, the real gross domestic product slightly rose by 0.4%;

13:30 – U.S. core PCE: The personal consumption expenditures index is another key measure the FOMC follows in assessing the progress of the inflation. In the past report, the price index of the PCE rose by 0.4% and the core PCE (excluding food and energy) inched up by 0.1%. On an annual rate, the core PCE increased by only 1.5% – well below the FOMC’s inflation target.

14:55 – UoM Consumer Sentiment (revised): University of Michigan will publish its revised consumer sentiment monthly report; this survey could provide information regarding the shifts in U.S consumers’ sentiment; according to the recent report, the sentiment index slipped to 81.8;

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