Week Ahead: BOE and ECB To Dominate in a Busy Week


On Friday, the US Labour department released impressive jobs numbers. The numbers showed that more than 203K jobs were created in August, with the unemployment rate remaining at 3.9%. Perhaps, the biggest data was the improving wages. In August, wages grew by 0.4%, which was higher than the expected 0.3%. This was a huge improvement and could be attributed to the tightening labour market in the country. For months, the US has had hundreds of thousands of jobs that are yet to be filled. This creates a huge challenge to policymakers who are also working with a president deeply opposed to migration. The increasing wage numbers led to the dollar falling as yields rose. The gap between the ten-year yield continued to fall.

This week, the focus among traders will be on trade. On Friday, it was announced that the US will impose tariffs on Chinese goods worth more than $267 billion. This came after the public hearing period ended. This led to a strong letter from Apple, which said that the new tariffs will lead to higher prices. On Saturday, the US president asked Apple to move its production back to the US to avoid the new taxes. On Sunday, he congratulated Ford for stopping manufacturing of a car brand in China. This week, these tariffs will kick off, which will lead to a retaliation from China.
Traders will also focus on Brexit. Last week, two important news emerged. On Wednesday, it emerged that Germany and the UK had come to a concession on a few key issues. The new deal meant that the UK and the EU will go on with the Brexit plans as planned, with some issues being addressed after the breakup happens. On Friday, a transcript from the Chief EU negotiator showed that he was willing to compromise. However, during the weekend, conservative politicians led by the former Foreign Affairs secretary condemned Theresa May of caving in to Brussels.

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This week, we will find important UK data. On Monday, we will receive the final reading of the second quarter GDP numbers. Traders expect that the economy expanded by 0.2%. At the same time, the UK will release the industrial production data that is expected to show that growth was unchanged at 1.1%. The manufacturing production data will show that it slowed from 0.4% to 0.2%. On Tuesday, we will receive the employment numbers which are expected to show an increase of 2.5% in wages. The unemployment rate is expected to remain unchanged at 4.0%. On Wednesday, we will receive the interest rate decision from the Bank of England.
Another important day this week will be on Thursday, when we will receive the interest rate decision from the ECB. The rate is not expected to change but traders will want to know the thinking of the ECB. Specifically, they will want to know what the ECB means by making the interest rate decision through summer.

On the same day, we will get the employment numbers from Australia. The data is expected to show an improvement in the number of people employed with the unemployment rate remaining at 5.3% as participation rate increases to 65.6%.
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