World markets through the week ahead will remain fixated on the developments in the long and exhausting Sino-US trade war. Along with that front, fluctuations in the Chinese yuan will be watched with concern as the US ponders means of combatting what appears to be now a currency war.
German and other Euro figures
The August ZEW economic sentiment report on the Eurozone economy and the near-continental entity’s powerhouse Germany is being released on Tuesday. The findings and numbers will determine the common currency’s navigation as the market mood worldwide remains downward-biased in the midst of the inflaming China-US trade war, rate cuts by successive central banks and an expected global slowdown this year. Other Euro-related data will include the German and again, Eurozone, GDP and Eurozone industrial production. The GDP numbers will show whether Berlin managed to avoid a feared recession in the second quarter.
Italy’s almost-crisis in government
Come Monday, Italians will find themselves in yet another government crisis as the coalition partner the League’s leader Matteo Salvini threatens to pull out his party, citing irreconcilable differences and paving the way for snap elections. Salvini has called his party’s lawmakers from the summer recess to Rome for a filed vote of no confidence in his own government with the 5-star movement. La Repubblica claimed that Salvini was hoping to win the elections and then withdraw Italy from the Eurozone if Brussels continued to impose its rules when it came to budget preparations. Salvini swiftly rejected the newspaper’s claim.
American data
Under pressure from the heating trade war with China and President Donald Trump’s aggressive calls for a higher rate cut of even up to one percentage point, the US Federal Reserve along with investors will heed a number of figures from the American economy. US consumer price inflation, up for release on Tuesday, will be closely watched to see if the long-muted inflation has seen any rise towards the Fed’s 2 percent target during the past month. US Core retail sales, US Philadelphia Fed’s manufacturing index are on the economic calendar.
‘Currency wars’
Volatility in the Chinese yuan is likely to continue to dominate stock markets. The main driver behind the recent risk-off mood and flight to safer investments, the yuan’s fall let by China’s central People’s Bank has caused much headache for the US administration and monetary policy-makers. In what essentially may become a currency war, comments and potential counter moves in Bejing and Washington will be determinant for the markets from Asia to North America.
Monday
Japan – Mountain Day holiday
Tuesday
UK Average Earnings Index, UK Claimant Count Change, Germany ZEW Economic Sentiment, Eurozone ZEW Economic Sentiment, German CPI, US Core CPI, China Industrial Production
Wednesday
Germany GDP, UK CPI, US Crude Oil Inventories, Australia employment change, Eurozone GDP, Eurozone industrial production
Thursday
UK Retail Sales, US Core Retail Sales, US Philadelphia Fed Manufacturing Index
Friday
US Building Permits
