- Chinese data are among the most important ones to watch this week
- Canadian investors await the jobs report
- US CPI for July is the most crucial print for the dollar and US indices
Donald Trump made sure that investors do not forget about Trade Wars. His initiative to consider higher tariffs on the Chinese imports scared traders as it shows he could go far to fight for trade concessions. As data from China start deteriorating, investors could ask themselves: are we on a verge of a global slowdown?
Data from China: trade (Wednesday), inflation (Thursday), new loans (Friday): Is China a risk for the global markets again? A present depreciation of the yuan is different from that of 2015 that led to “August shock” on the markets but there are warning signs. All 4 PMIs deteriorated in July – the last such situation occurred in April 2017. The biggest bombshell (of 25% tariffs on $200 billion of imports) may still be ahead so traders will investigate if there is already a damage to the economy.
CPI inflation in the US (Friday, 1:30 pm BST): Inflation in the US increased to a 6-year high of 2.9% in June but that could have been a peak – at least for some time. Oil prices stabilized, the dollar gained and higher base effects could start taking inflation to lower levels. That will not deter the Fed from increasing rates again in September but at least could be an argument that this USD-positive story has been already consumed by the markets.
The NFP report in Canada (Friday, 1:30 pm BST): The US NFP report is already behind us but for the CAD traders emotions will run high this Friday too as the Canadian report is about to be released. Strong labour market, rising wages and higher inflation prompted the Bank of Canada to follow the Fed on the path of higher interest rates and a solid report would fit that trend.