Financial Markets outlook for the week – by- Michael Oyebamiji

The last week in July was more like a major week for financial markets especially for the Japanese market. Bank of Japan finally put end to more stimulus and highlighted they will evaluate the effectiveness of their policy so far. On the back of this, JPY has rallied massively thereby more downward pressure on USDJPY and JGB curve.

This week is the first week of trading in the month of August, there seems to be more economic events ahead of us than ever. Earlier this morning, we got a disappointing manufacturing pmi data from china at 49.9 which are the lowest since March, 2016. This means Chinese economy is yet to overcome her economic misery. Let us bear in mind that any pmi data that falls below 50.0 is a strong indication of contraction.

Furthermore, the major event this week is the Bank of England inflation report and interest rate decision on Thursday. BoE is expected to cut interest rate by 25bps. In the event of this, GBP is expected sell off massively and a strong rally on FTSE and other major indices across the board. Reserve Bank of Australia is also expected to cut interest rate by 25bps. Let’s recall that in the last meeting of RBA, the Governor made it clear that disappointing inflation data and strong Aussie might convince RBA to cut rates further.

there quite a lot of economic data to look forward to from the United States as well; ISM manufacturing pmi, ISM non-Manufacturing pmi, ADP Nonfarm employment change, and Non-farm payrolls for July. Market is expecting a Non-farm payroll of around 175,000 jobs which is slightly below the previous month of 285,000 jobs.