US Employment reports and meetings of the BoE and RBA this week

US Employment reports and meetings of the BoE and RBA this week

In the UK, the BoE's "Super Thursday" policy meeting will likely become the focus of market attention, amid speculation that the bank could raise interest rates this year.

-in Australia, RBA is expected to decide to stay in wait. The market will probably focus on any statement indicating whether policymakers are comfortable with the latest increase in Australian yields as well as AUD appreciation.

-Employment data in the United States for July are expected to show that the labour market continues to improve. While this could support the expectations of another rise in interest rates in the Fed during this year, analysts believe that inflation data can be the main determinant of the next Fed's move.
-We also obtain key economic data from the United Kingdom, the United States, New Zealand and Canada.

July 31 Economic Calendar

On Monday, preliminary data from the eurozone's CPI for July will be in the spotlight of the market. Without a forecast available yet, experts consider that the figures of both the main rate and the underlying CPI rate have remained constant, with upward-biased risks. The Markit compound PMI of the eurozone showed that prices rose only modestly in July. We must also bear in mind that the monthly CPI data of July 2016, which should be excluded from the annual calculation now, were from-0.6% and-0.7% for the main rate and the underlying rate, respectively. Therefore, all of this implies that even if we now have unpromising monthly data, as long as they are better than the disappointing results produced in July 2016, they could still cause annual CPI rates to increase.

Economic calendar for the rest of the week

On Tuesday, during the Asian day, the RBA will announce its policy decision and the forecast is that the bank will keep the rates unchanged once again. July has been anything but boring for AUD investors and traders. The turmoil began after the minutes of the last meeting showed a debate among politicians about the level of the policy of neutral rates in Australia, which was enough to increase the speculation that the bank might be getting ready to raise interest rates soon. However, a few days later, both Governor Lowe and vice Governor Debelle Viertieron cold water on such expectations, noting that markets should not speculate or draw too much conclusions from these conversations. Lowe made it clear that RBA is likely to remain in wait in the near future.

However, this meeting is likely to be closely monitored for any updated signal on the policy and, in particular, to see if RBA is comfortable with the latest increase in Australian yields, as well as AUD appreciation. In fact, both Lowe and Debelle pointed out that it would be desirable to have a lower AUD, implying a modest risk that the statement accompanying the decision would communicate a similar nuisance with respect to the recent increase of AUD. However, it is likely that the main factor that will determine whether the RBA will become more "hawkish" could soon be the second-quarter wage data, to be published in mid-August, taking into account the most recent concerns of RBA officials regarding wage growth.