Events to Look Out for Next Week

• Manufacturing PMI (CNY, GMT 01:45) – The Caixin Manufacturing PMI is expected to slightly decline to 51.0 in July from 51.3, confirming a slowdown of the recovery as there are signs of a deceleration in activity in China and the US.
• Manufacturing PMI (EUR, GMT 07:55) – The German Manufacturing PMI for July is seen unchanged at 65.6.
• Manufacturing PMI (GBP, GMT 08:30) – The Manufacturing PMI for July is seen unchanged at 60.4.
• ISM Manufacturing PMI (USD, GMT 14:00)– The ISM index is expected to tick down to 60.5 from 60.6 in June and an 18-year high of 64.7 in March, versus an 11-year low of 41.5 in April of 2020, and an all-time low of 30.3 in June of 1980.

Tuesday – 03 August 2021

• Interest Rate Decision and Statement (AUD, GMT 04:30) – After July’s data and more precisely the jump in Q2 inflation, there are speculations that the RBA could retain its dovish camp, which continues to argue that the current uptrend in inflation, not just in Australia, is largely due to transitory factors. There is also a background of concern that virus developments and containment measures in a country with low vaccination rates will hit growth in the third quarter.

Wednesday – 04 August  2021

• Services and Composite PMI (GBP, GMT 08:30) – In the UK, the preliminary PMIs came in much weaker than expected as virus disruptions hit confidence. Last week the UK Composite PMI dropped to a 4-month low of 57.7 in the flash reading, from 62.2 in June. Services and manufacturing PMIs were both at 4-month lows, at 57.8 and 60.4 respectively. Still high readings that signal ongoing growth, but the slowdown compared to June is palpable, “with survey respondents widely reporting staff and raw material shortages due to the pandemic”. Concern about the loss of momentum contributed to the lowest degree of optimism on the outlook for nine months.
• ADP Employment Change (USD, GMT 12:15) –The key private payrolls number is expected to grow by 600K (compared to last month’s 692K reading).
• ISM Non-Manufacturing PMI (USD, GMT 14:00) – The ISM-NMI index is expected to rise to 61.0 from 60.1 in June, 64.0 in May, and 62.7 in April. The run-up through May left the four highest readings in history. We saw an 11-year low of 41.8 in April of 2020, and an all-time low of 37.8 in November of 2008.

Thursday – 05 August 2021

• Interest rate Decision, MPC Voting & Monetary Policy (GBP, GMT 11:00) – The sharp week-on-week drop in Covid cases in the UK and the IMF’s sharp upward revision in its UK growth forecast for 2021 have underpinned UK economic forecasts and Sterling this week. The IMF, to recap, is expecting UK growth of 7.0% this year, which is their joint fastest growth projection out of the major advanced economies. Note that sterling markets are discounting a 15 bp BoE rate hike for May 2022, followed by a 25 bp hike in May 2023. The general expectation is that the BoE will tacitly cement this expectation via upgraded growth and inflation forecasts at its quarterly Monetary Policy Review, which will be published after the Monetary Policy Committee meeting next week, although the Old Lady’s guidance can be expected to remain cautiously dovish for now.

Friday – 06 August 2021

• Event of the Week – Non-Farm Payrolls (USD, GMT 12:30) – A 600k July nonfarm payroll increase is anticipated, after gains of 850k in June and 583k in May. The Jobless rate should drop to 5.6% from 5.9% in June and 5.8% in May. Hours-worked are assumed to rise 0.7% after a 0.2% June increase, while the workweek ticks up to 34.8 from 34.7 in June. Average hourly earnings are assumed to rise 0.3% after gains of 0.3% in June and 0.4% in May, as minimum wage workers have been slow to return to the work force. In the last expansion we saw a 3.5% peak for y/y wage gains, in both February and July of 2019, before the pandemic boost to an 8.0% peak in April of 2020. The markets forecast a robust payroll trajectory in 2021 following the winter lull, thanks to stimulus deposits and vaccines.
• Labour Market Data (CAD, GMT 12:30) – Canadian employment surged 231.0k in June, much stronger than forecast, following the -68.0k drop in May. The report reflected a lot of the distortions from the pandemic, the lockdowns on the third wave of Covid, and the lifting of some restrictions. With the June gains, the economy has now recovered 2.65 mln workers of the -3 mln lost on the pandemic. The labour situation was helped by some reopenings in the economy.