Weekly Market Outlook (02-06 October)

UPCOMING EVENTS:

• Monday: BoJ
  Summary of Opinions, Swiss Retail Sales, Eurozone Unemployment Rate, US
  ISM Manufacturing PMI.
• Tuesday: RBA
  Policy Decision, Swiss CPI, US Job Openings.
• Wednesday: RBNZ
  Policy Decision, Eurozone Retail Sales, Eurozone PPI, US ADP, US ISM
  Services PMI.
• Thursday: US
  Challenger Job Cuts, US Jobless Claims.
• Friday: Japan
  Wage data, Swiss Unemployment Rate, US NFP, Canada Jobs report.

Monday

The Eurozone Unemployment Rate is expected
to remain unchanged at 6.4%. The labour market remains tight and central
banks would like to see it softening to have more confidence on a timely and
sustainable achievement of their inflation targets.

The US ISM Manufacturing PMI is expected
to tick higher to 47.7 vs. 47.6 prior. As a reminder, the S&P
Global US Manufacturing PMI beat expectations,
although it remains in contraction, and overall the comments point to stagnation
in activity.

Tuesday

The RBA is expected to keep the cash rate
unchanged at 4.10%. The RBA expected headline inflation to pick up in Q3 due to
higher energy prices and highlighted that the labour market could be at a
turning point. Indeed, the latest
labour market report was lacklustre as the
bulk of jobs added were part time and the latest monthly
CPI showed a pick up in headline inflation
with the Core measure decreasing.

The US Job Openings will be one of the
top releases this week as the big
miss in the previous month caused some notable moves in the markets due to the focus on the labour market data. The consensus
sees Job Openings to remain basically unchanged for August at 8.83M vs. 8.827M
for July.

Wednesday

The RBNZ is expected to keep the Official
Cash Rate unchanged at 5.50%. The central bank is confident that with the
current level of interest rates inflation will return to target and it’s ready
to look through some strength in the data in the near term as communicated in
the latest
policy statement.

The US ADP is a labour market report and
as such it has the potential to move the markets. The consensus sees 160K jobs
added in September compared to 177K prior.

The US ISM Services PMI is expected to
tick lower to 53.6 vs. 54.5 prior. The latest S&P
Global US Services PMI missed expectations,
although the index remained in expansion. Again, the comments pointed to
contracting demand and waning activity.

Thursday

The US Jobless Claims data continues to be
one of the top releases each week as the focus has now turned more towards the
labour market. Last week, the data
beat expectations again in a sign that
the labour market remains solid for now. There’s no consensus at the moment,
but keep an eye on it as it remains a key labour market report.

Friday

The Japanese wage data is going to be
important for the BoJ as the central bank continues
to repeat that it wants to see a
solid growth in wages to be confident on a sustainable achievement of their
inflation target and the consequent exit from monetary easing.
Notably, the data has been trending lower in the past few months.

The US NFP is expected to show 163K jobs
added in September compared to 187K seen in August and the Unemployment Rate to
tick lower to 3.7% vs. 3.8% in the prior month. The Average Hourly Earnings
will also be a key metric to watch with the yearly growth seen at 4.3% vs. 4.3%
prior and the monthly one at 0.3% vs. 0.2% prior. Also, watch out for the revisions as the prior months continue to be revised downwards.