Look Ahead 16/8/23: RBNZ rates; FOMC minutes; UK consumer price data; Target, Cisco Systems earnings

(Video Transcript)

Rocky time for NZD/AUD

Hello, I'm Angeline Ong and this is IGTV. Welcome to Look Ahead to 16 August 2023. Now, central banks swing into action again, this time in New Zealand. We're expecting the Reserve Bank of New Zealand (RBNZ) rate decision and rates are expected to remain at 5.5%.

Just looking at the Australian dollar versus the New Zealand dollar, there's plenty of volatility. It has been range-bound, as you can see here, between the 9147 level and the 9316.

However, this cross got a bit of a lift because of the surprise policy easing in China, which then spurred hopes that we could see more meaningful stimulus on the way.

The cuts in key rates there also prompting concerns, that if Beijing held back on fiscal spending to get demand going, things could get progressively worse for its economy. China is, of course, closely watched by Australia and New Zealand because it's the major driver of prices for their resources.

UK wages rocketing

To the UK now, where we have the Consumer Price Index and also the Producer Price Index expectations, negative 1.3% year-on-year, and we also have the Retail Price Index to boot as well. The UK is a closely watched the economy because cable is one of the most traded financial instruments on IG.

We saw a slight lift there, let's check by how much. Actually, it's now up around a tenth of a percent. It's given back some of those gains earlier because data shows British wages grew at a record pace in the second quarter.

Now, all this is adding fuel to the expectation that the Bank of England's inflation fight isn't over. However, gains were capped and those concerns were capped by some signs of a cooling labour market.

We saw earlier data from the Office for National Statistics (ONS) showing that wages, excluding bonuses, were 7.8% higher than a year earlier in the three months to June. This was the highest annual growth rate since comparable records began in 2001.

US housing stats expected

To the Eurozone, and we've got industrial production numbers and also, from the US, keep an eye out on building permits and housing stats for July.

We also have industrial production figures, which will be key reading because that, not only gives us a snapshot of what's happening to manufacturing in the US, but also consumption out of places like China, like in Asia.

And the Energy Information Administration's (EIA's) crude oil inventories will be one to watch as well, given there's been so much volatility in the oil space.

Uncle Sam is looking strong

Of course, the set piece out of the US will be the Federal Open Market Committee (FOMC) minutes. And just pulling up the Euro versus the US dollar there, the FOMC minutes will give us an indication of whether policy makers in the US still think inflation is a really big problem. Recent data have shown surprising resilience in the US economy.

We've seen that China has had weakening data, but the US still showing that it has a robust labour market, and also inflation is still quite high there.

On the UK, look out for earnings from Aviva, Admiral and Balfour Beatty is also out with first half numbers, whilst the retail focus continues in the US. We've just had numbers out from Home Depot, but tomorrow we'll have numbers from Target second-quarter results there, along with fourth-quarter numbers from Cisco Systems.

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