It was another interesting week for financial markets last week, with traders having to battle with a US shutdown that has delayed key data updates, including the Non-Farm Payrolls. So far, markets have remained strong, with major indices hitting fresh highs over the course of the week; however, there are doubts that the momentum can continue in the States and indeed globally if the US government shutdown continues.
It looks like being a lively start to this trading week, with the initial focus surely on Japanese markets after outsider Sanae Takaichi won this weekend’s leadership battle to become Japan’s first female Prime Minister. Her victory is likely to lead to a jump in Japanese stocks but a negative for the yen on dovish Bank of Japan repricing.
There will be a big question mark for the macroeconomic calendar for the week with regard to US data releases; however, most market participants are expecting last week’s missed numbers to be released this week, with the Non-Farms, as always, to be a big focus. In addition to the potential US data releases, we have a heavy central bank schedule, with key central bankers set to speak as well as the latest rate update from the RBNZ.
Here is our usual day-by-day breakdown of the major risk events this week:
Traders are expecting to see some gapping on the open for the yen and Japanese products on Monday after the surprise leadership victory for Sanae Takaichi over the weekend. There is little else on the calendar over the rest of the trading day, although we do hear from central bank heavy hitters, ECB President Christine Lagarde and Bank of England Governor Andrew Bailey.
It’s a quiet day on Tuesday with very little of note scheduled on the data front; however, we do have several central bankers speaking later in the day, with the ECB’s Lagarde speaking again along with Bundesbank’s Nagel, as well as Fed members Bostic, Bowman, Miran, and Kashkari. Canadian markets will also come into focus early in the New York session with the Ivey PMI data due out.
There is another strong central bank focus for traders on Wednesday, with the initial focus in the Asian session on New Zealand with the Reserve Bank of New Zealand’s latest interest rate decision due. Later in the session, we hear from Bank of Japan Governor Kazuo Ueda, which will have a strong focus after the weekend’s leadership change. The main focus later in the day will be the release of the FOMC minutes; however, around that, we have more updates scheduled from Fed members Musalem, Barr, and Kashkari, as well as probably the usual weekly US Crude Oil Inventory data.
Chinese markets return for the first time in a week in the Asian session, and that alone will see a big focus on them as they adjust to any moves in global markets. In addition to the reopening, we are also due to have Chinese new loans data released. The New York session may see a “double play” of weekly unemployment data as well as more “Fedspeak” from members Bowman and Barr, who are likely to be superseded by Fed Chair Jerome Powell when he speaks earlier in the session.
Friday has the propensity to be the busiest day of the week again, and it will come down to whether US data is back on the calendar and we get the Non-Farms update. The Asian session will see an early focus on Australian markets with RBA Governor Michele Bullock set to speak; however, there is little else on the calendar until the New York open, when we will get the Canadian employment data and maybe the US employment numbers.
