Themes for the week and potential opportunities
Earnings will be a major highlight of the coming week. In fact it’s the first of three heavy weeks during the peak of the Q2 earnings season that brings out 96 reports, followed by 194 the week after and 114 the week after that before the momentum then wanes.
Also, don’t forget the RBNZ ‘special’ statement where it most likely will not simply reiterate the status quo (or make hawkish adjustments), so this should shade expectations to the downside approaching the event.
USD: quiet week ahead.
GBP: first thing, watch BoE’s hawkish Weale (Mon) to see if he contraddicts anything Haldane said on Friday. CPI (Tue) is expected to rise on the recent decline in GBP. Retail sales (Thur) encompasses post-referendum data and is expected lower. Also, there will be a one-off UK Markit ‘flash’ PMI survey (Fri) which may confirm a negative impact on confidence in manufacturing and services.
EUR: big week ahead. The focus will be on the ECB (Thur) with no change expected but with all ears on Draghi’s assessment of Brexit impact and the Italian Banking sector. Before that we have Ger ZEW (Tue), EU Consumer Confidence (Wed) and then EU flash PMI (Fri) with confidence levels expected to decline.
Comm-Dolls: The July RBA Board meeting minutes are due but nothing new is expected. The New Zealand CPI is expected to show feeble NZ price pressures, rising by 0.5% to be up a negligible annual 0.5%. Thre will also be a GDT Auction (Tue) where a modest bounce is expected. For CAD, we have retail sales & CPI on Friday, both expected weaker but it will take more than that the change the BoC’s mind on the “robustness” of the economy. So Crude will probably impact Cad more than data.
Going into the week I’ll be looking for Euro, Nzd and Gbp weakness vs. Cad and USD initially. Equities still seem buoyant, as do bullion.