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We ended a week of central bank announcements (BoE, ECB, RBA, BoJ) with heightened geopolitical tension, which propped up the USD, and even more so, the JPY. *What will be the key fundamental factors this week? Key releases will start after a light Monday.

Tuesday:

Eurozone ZEW Economic Sentiment (Aug.). Forecast: 41.3, Previous 48.1
German ZEW Economic Sentiment (Aug.). Forecast: 18.2, Previous: 27.1




From the Eurozone and Germany specifically, we are expected to see the most recent gauge of economic sentiment deteriorate. Even though both readings are still expected to be positive, it seems like sentiment has peaked in January and has been receding since then.

US JOLTS Job Openings (July). Forecast: 4.74M, Previous: 4.64M



Labor market conditions in the US continues to improve. According to the Bureau of Labor Statistics, recent readings of job openings have surged to highs above the pre-financial-crisis period. July’s print is expected to continue improving, and might continue to keep the USD elevated.

Wednesday:
UK Claimant Count Change (July). Forecast: -29.7K, Previous -36.3K
Unemployment Rate (June). Forecast: 6.4%, Previous: 6.5%

Average Earnings Index 3m/y (June). Forecast: -0.1%, Previous 0.3%



UK jobs data will be key. The claimant count change is expected to decline as a slower rate, but this should not be so alarming. The unemployment rate is expected to edge lower, but that is not much to write home about. However, the earnings index, seen to have shrank in the 3 months to June compared to the same period in 2013, could reaffirm the BoE’s concern of the lack of wage growth. The lack of wage growth is something that will likely keep the rate hike from happening in 2014. Note in the historic chart above, that the previous 3 readings have missed forecast (the orange marks).

BoE’s quarterly Inflation Report will have even more significant implication to monetary policy. The bank president, Mark Carney will hold a press conference. *Make sure to watch it or at least watch the markets reaction to this presser. Again, it will be interesting to see where the BoE sees inflation, especially wage inflation, and how this effects its interest-rate-hike time-line.

US Retail Sales m/m (July). Forecast: 0.2%, Previous 0.2%
US Core Retail Sales. Forecast: 0.4%, Previous: 0.4%
Not much is expected to change for July’s retail sales numbers. This reading has been less than impressive lately, so an above-expectation print can boost the USD at least in the short-term. If retail sales numbers miss forecast, we should limit the bearish expectation because the prevailing trend is strong for the USD in the recent weeks.

NZ Retail Sales q/q (June). Forecast: 1.0%, Previous 0.7%
NZ Core Retail Sales q/q (June). forecast 1.1%, Previous 0.8%

Thursday:

German Prelim GDP q/q (Q2). Forecast: -0.1%, Previous: 0.8%



Eurozone Final CPI y/y (July). Forecast: 0.4%, Previous: 0.4%

The preliminary estimate of German’s GDP growth in the second quarter is expected to be around -0.1%, after a 0.8% print for Q1. A reading below 0 would be in-line with recent soft data, credit crunch issues, and geopolitical tensions that have plagued the Eurozone. It would add to the theory that the ECB should implement more stimulus measures soon.

We saw the preliminary inflation estimate at an annual rate of 0.4% a couple of weeks ago. The final version is expected to be the same. Downward revision can have very negative effect on the already ailing EUR.

US Jobless Claims. Forecast: 307K, Previous 289K

Jobs data continue to impress, and we have recently gotten a couple of below-300 reading in the jobless claims print since July. A run of readings below 300K can make the case for an earlier Fed rate hike than in mid-2014.

Friday:

UK GDP q/q (Q2), second estimate. Forecast 0.8%, 1st Estimate: 0.8%.

UK GDP data should confirm growth of 0.8% in the second quarter. This would be the strongest quarter to quarter growth rate since Q3 of 2012, and reflects a recovery on track in 2014. However, we know this already, and the BoE is looking for growth to translate to an increase in wages, which then can in turn provide the domestic demand that cna help sustain the recovery track.

CAN Manufacturing Sales m/m (June). Forecast: 0.5%, Previous: 1.6%
The Canadian economy has been leveling off somewhat, and a reduced growth in manufacturing sales in June would confirm the recent “flatness” in the Canadian economy.

US PPI m/m (July). Forecast: 0.1%, Previous. 0.4%

US Empire State Manufacturing Index (August): Forecast: 20.3, Previous: 25.6
Industrial Production m/m (July). Forecast: 0.3%, Previous 0.2%

Prelim UM Consumer Sentiment (Aug). Forecast: 82.7, Previous: 81.3



We will wrap up the week with a slew of US economic data. Collectively Friday’s data is expected to show that*the consistent economic recovery shown in Q2 can carry over into Q3. If the UM Consumer Sentiment reading is going to match forecast around 82.7, it will be the highest reading in a year, since July 2013

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