On Monday, Canada will hold its federal election while on Tuesday, in the U.S., we will receive the JOLTS job openings report and the CB consumer confidence Index.
On Thursday, the BoJ will release its monetary policy decision while in Europe markets will be closed for Labor Day. In the U.S., data releases will include unemployment claims and the ISM manufacturing PMI.
In the U.S., the consensus for the CB consumer confidence index is 87.4, down from the prior reading of 92.9. Households are increasingly concerned about the impact of tariff-induced price hikes on their spending power, as well as the stock market downturn negatively impacting their investments and savings.
Meanwhile, the trimmed mean CPI—a key measure of core inflation—is expected to rise by 0.6% for the quarter, bringing the annualized rate down to 2.8%. Momentum in core inflation remains comfortably within the RBA’s target band, though risks to the forecast are tilted slightly to the upside.
A surge in imports ahead of anticipated tariff hikes is expected to weigh down on GDP growth, but the inventory buildup will provide some cushion. Consumer spending was soft early in the year but improved in March, helped by better weather and a rise in purchases done before tariffs would impact prices.
At this week's meeting, the BoJ is widely expected to keep its policy rate unchanged at 0.50%, with policymakers opting for caution given the latest mixed economic backdrop.
Traders will closely monitor the updated economic projections, particularly for any adjustments to inflation and growth forecasts. The BoJ is still expected to deliver a rate hike at some point later this year.
Analysts from Wells Fargo note that regional Fed surveys point to weaker new orders and rising input costs, as firms grapple with higher prices for steel, aluminum, and other imported goods. With demand under strain and cost pressures mounting, capital spending and hiring are likely to stay subdued in the near term, keeping manufacturing growth on the back foot.
The labor market is anticipated to show modest growth. Heightened uncertainty from shifting trade policies and federal funding freezes has cooled hiring appetite, as reflected in declining job postings and weakening service sector indicators. However despite softer demand for new workers, layoffs remain subdued, keeping the unemployment rate stable.
This article was written by Gina Constantin at www.forexlive.com. Read More Details
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