Market Outlook: What to Watch for This Week

• Key Economic News from Last Week
• Key Economic Data and Events for This Week

Key Economic News from Last Week

Asian Markets:

• Japan: On Tuesday, August 27, the Japanese core inflation rate fell to 1.8%, below the expected 2.1%, negatively impacting the Japanese yen. However, on Friday, August 30, the annual Consumer Price Index (CPI) showed a positive reading of 2.4%, exceeding both expectations and the previous rate of 2.2%. This indicates a 0.2% increase in annual core inflation in Japan, supporting potential interest rate hikes and positively reflecting on the Japanese yen, as per analyst analysis.
• Australia: On Wednesday, August 28, Australia's core CPI exceeded expectations at 3.5% compared to the anticipated 3.4%. Despite this, it is lower than the previous reading of 3.8%, indicating a 0.3% decrease in annual inflation in Australia, which negatively impacts the Australian dollar, as per analyst analysis.
• China: The Chinese Manufacturing PMI reported a negative reading of 49.1, below expectations of 49.5. This indicates a contraction in China’s manufacturing sector for the fourth consecutive month, negatively affecting the Chinese yuan and contributing to its decline against the U.S. dollar, as per analyst analysis.

U.S. Dollar:

• Last week’s economic data will influence the Federal Reserve’s interest rate decisions in their upcoming meeting on September 17-18:
  • Gross Domestic Product (GDP): The preliminary quarterly GDP reading came in at 3.0%, higher than the expected 2.8%, which is positive for the U.S. dollar, as per analyst analysis.
  • Inflation: The Core Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred inflation measure, matched expectations with a monthly reading of 0.2%.

European Markets:

• On Friday, August 30, the preliminary annual CPI for the Eurozone came in at 2.2%, matching expectations but lower than the previous reading of 2.6%. Additionally, the preliminary annual Core CPI for the Eurozone fell from 2.9% to 2.8%, below the previous reading.

Key Economic Data and Events for This Week:

• Canadian Dollar: On Wednesday, September 4, the Bank of Canada is expected to announce an interest rate cut of 25 basis points, bringing the rate to 4.25%. Additionally, Canadian employment data will be released on Friday, September 6. Employment is projected to rise from -2.8K to 25.6K, while the unemployment rate is expected to increase from 6.4% to 6.5%.
• U.S. Dollar: This week, attention will turn to U.S. employment data, set to be released on Friday, September 6. The Non-Farm Payrolls report is expected to show an addition of 164,000 jobs. The unemployment rate is forecasted to decline from 4.3% to 4.2%.