Insights 
VT 
Next week, focus will be on the US ISM Services PMI, the Bank of England rate decision, Canadian and New Zealand job reports, and China Trade data.
The schedule includes OPEC+ meetings, US Employment and Durable Goods figures, and various PMI and trade balance reports from the Eurozone, UK, US, China, Canada, and New Zealand.
Opec Plus Meeting
OPEC+ meets to discuss a further increase in output after recent hikes. Expectations vary, with potential adjustments based on global compliance and demand.
The US ISM Services PMI and S&P Global data indicate improved services activity, contrasting with manufacturing. There are concerns about whether this growth can be sustained amid rising inflation and uneven economic conditions.
New Zealand’s Q2 jobs data anticipates a minor employment decrease and higher unemployment, with expected wage growth dampening slightly. Analysts foresee job losses among younger workers but acknowledge potential labour market exits.
The RBI is expected to maintain its current rates, following a recent rate cut, while considering inflation and currency factors. The central bank plans to manage liquidity and monitor potential policy adjustments.
Bank Of England Rate Anticipation
The Bank of England is anticipated to cut the Base Rate by 25bps, following recent data and inflation concerns. They aim to balance inflation risks with economic growth and labour market conditions.
Banxico may ease its rate cuts, with analysts predicting a 25bps reduction. Recent data supports cautious monetary policy despite ongoing trade tensions.
New Zealand’s inflation forecasts are expected to rise, impacting the Reserve Bank’s rate cut decisions. Inflation expectations have been increasing across various time horizons.
The Swedish CPIF is expected to show an increase due to electricity prices, with further rate cuts possibly on the horizon.
China’s trade balance may reflect export growth and import contraction, amidst global demand pressure and trade negotiations.
Canada’s job report will indicate labour market trends amidst current BoC rate holds. Markets anticipate possible rate cuts depending on economic conditions.
The BoJ maintained its policy rate, noting high uncertainties in trade policy and inflation projections. The upcoming summary of opinions will provide further insights.
With the OPEC+ meeting occurring while markets are closed, we see potential for a gap in oil prices at the Monday open. According to the latest data from the Energy Information Administration (EIA), U.S. crude inventories saw a surprise build of 1.2 million barrels last week, which could amplify any bearish sentiment from the meeting. Traders might consider buying short-dated straddles on oil ETFs to play the expected volatility, regardless of the direction.
The U.S. ISM Services data on Tuesday is a key event, particularly as the flash reading already hit a seven-month high. With the most recent Consumer Price Index (CPI) holding firm at 3.5% year-over-year, another strong ISM print could increase bets on a more hawkish Federal Reserve stance this autumn. This environment could drive up volatility in short-term interest rate futures, making protective puts on bond ETFs a prudent hedge.
We see the Bank of England’s expected 25 basis point rate cut on Thursday as largely priced into the market. The real trading opportunity will come from the vote split and forward guidance, especially since recent ONS data showed UK Q2 GDP contracted by 0.1%. Options on the GBP/USD pair could be useful, as a surprisingly dovish tone could quickly send the currency lower.
The New Zealand inflation survey on Thursday will be a focus, as expectations have been drifting higher. Back in July, the annual inflation rate unexpectedly ticked up to 2.8%, complicating the outlook for the Reserve Bank of New Zealand. Any further rise in expectations could reduce the chances of near-term rate cuts and support the NZD.
We are watching the jobs reports from New Zealand on Tuesday and Canada on Friday for signs of further economic weakness. With Canadian unemployment already at a multi-year high of 6.9% as of June, another soft print could cement expectations for a Bank of Canada rate cut this year. This outlook could justify holding bearish positions on the Canadian dollar through futures or buying put options.
China’s trade data on Thursday will be viewed through a lens of global growth concerns, particularly with the U.S. trade truce set to expire on August 12th. Following a disappointing industrial production report for June, which grew by only 3.8%, another soft number could weigh on risk assets. Traders could look at buying puts on copper futures or the AUD/USD pair as a hedge against a negative surprise.
