Key U.S., Global Data to Set September Tone
NEW YORK (TheStreet) -- As is usually the case, the month of August was marked by reduced trading volumes and slowing volatility in stocks and currencies. The S&P 500 experienced sideways declines (losing nearly 3%) and, against the U.S. dollar, the euro saw its smallest monthly trading range in six years.
However, these trends are unlikely to continue in the coming week -- not only because of changing seasonality but because a round of critical event risks are scheduled in coming sessions. Specifically, U.S. Non-Farm Payrolls will be released Friday and interest rate decisions will be handed down from central banks in five major economies (Australia, Japan, Canada, England and the eurozone). The combined impact of these events will likely guide market direction for most of September.
Although changes in interest rates are not widely expected at any of next week's central bank meetings, forward guidance relative to policy outlooks will be key for gauging sentiment. The Reserve Bank of Australia has surprised markets recently by reducing interest rates to historic lows, and has hinted that further easing could be on the way as raw materials exports continue to see declines.In Japan, the main question is whether the Bank of Japan will elect to expand its monetary base, with inflation growth holding below the central bank's target levels. In England and the eurozone, contentious issues are less well-defined, but investors will be looking for any evidence suggesting a timeline is in place for future changes in interest rates. Economic reports will also be seen in many of these areas. GDP figures will be released by Canada, England, Australia and the eurozone. Manufacturing data out of China will give investors an updated reading on the slowdown in productivity that has been seen in emerging markets. Taken as a whole, the macro data released next week will leave investors with a much clearer picture in terms of how the global economic recovery is progressing. U.S. Data, Tapering Implications The Friday Non-Farm Payrolls report should jar markets from their summer doldrums. For the month of August, the U.S. labor market is expected to show 180,000 new hires, with no change in the accompanying unemployment rate at 7.4%. From a U.S. perspective, this report will be the last key piece of data before the all-important September Fed meeting.
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