Asian markets opened mxi as trading volume is light with Hong Kong, Taiwan and South Korea on Mid-Autumn Festival holiday. Nikkei is trading down -1%, or -170pts, at the time of writing while Australia ASX 200 is trading up 1%. Weak economic data were released from China as industrial profits dropped -8.8% yoy in August, a sharp deterioration fro July's -2.9% yoy. But the data was shrugged off for the number of key events in the week ahead. In the currency markets, most major currencies are stuck in range against others with mild strength in Kiwi against other commodity currencies. In other markets, gold continues to feel the resistance around 1150 handle while crude oil is gyrating in range around 45.
In Eurozone, separatists in Catalonia in Spain won a parliamentary majority in the regional election. The result might now intensify the campaign for independence as the separatist leader pledged to lead Catalonia to statehood in 18 months. The Bank of Spain governor warned last week that Catalonia independence from Spain would automatically forced itself out of Eurozone and be dropped by EU. But the news over the weekend had little impact on the Euro so far.
In UK, the Centre for Economics and Business Research said in a report that BoE is predicted to raise benchmark interest rate in May or August. That's quite a delay from the CEBR's prior expectation of February. CEBR noted that "the global economic slowdown, driven by substantial weakness in emerging markets, most notably China, is holding back export prospects and curbing business investment." Meanwhile, the CEBR projected growth to be at 2.5% in 2015, 2.0% in 2016 and averages 1.7% over the years 2017-2020.
The economic calendar is like today. US personal spending and income are expected to rise 0.3% and 0.4% respectively in August. PCE core is expected to be unchanged at 1.20% yoy. Pending home sales is expected to rise 0.4% mom in August. The focus will mainly be on the speeches of a number o Fed officials. And the list include Fed governor Daniel Tarullo, New York Fed president William Dudley, Chicago Fed president Charles Evans and San Francisco Fed president John Williams. UK will also feature speech of Jon Cunliffe, Deputy Governor for Financial Stability of BoE.
Looking ahead, the economic calendar is very busy this week with a lot of key data featured. In particular, US ISM and NFP will be closely watched as Fed would need a string of solid data from now till December for the expected rate hike. We've talked about the softness in Sterling and it's vulnerable to releases of PMIs. Another two main focuses of the week will be China PMIs and Japan Tankan survey, both to be released on Thursday. Here are some highlights:
- Tuesday: German CPI; UK mortgage approvals; Canada IPPI and RMPI; US S&P house price, consumer confidence
- Wednesday: Japan retail sales; Australia building approvals; German retail sales, unemployment, Eurozone CPI, unemployment; Swiss KOF leading indicator; UK GDP final; Canada GDP; US ADP employment, Chicago PMI
- Thursday: Japan Tankan; China PMIs, Swiss retail sales; Eurozone PMIs; UK PMI manufacturing; US jobless claims, ISM manufacturing
- Friday: Australia retail sales; Japan unemployment, household spending; UK construction PMI, Eurozone PPI; US non-farm payroll and factory orders.