Trade. Tariffs. Jobs report
The US and Canada will be close on Monday for the Labor Day end of summer holiday, but the new week will still be "chock-a-block" with events and releases including more on trade, potentially more tariffs and the US/Canada jobs report.
Canada and the US will resume trade talks on Wednesday. On Friday, the "deadline" was passed shortly after a story broke that Pres. Trump was not going to give in on any concessions and he tweeted the story was indeed true. Negotiations were agreed to be kept out of the news until they are complete. So unless, there is another leak (and US Lighthizer and Canada's Freeland certainly kept that good faith promise last week), expect to hear little until there is an agreement.
The clock is ticking on the next round of tariffs on China. This one is the big one - 200 billions worth which would bring the tariff total, to about 50% of the total goods exported to the US. Along those lines, China will release their trade numbers on Friday. According to estimates from Bloomberg, their surplus is expected to widen to $31B from $28.1B.
US employment will be released on Friday. Non-farm payroll is expected to rise 193K vs 157K last month. The unemployment rate is expected to dip to 3.8% from 3.9%. The average hourly earnings are expected to rise 0.2% vs 0.3% with the YoY up 2.7%, unchanged from the 2.7% last month. The employment report is always a key release in the US. It is not expected to alter the Fed's decision to hike rates on September 26th but could help to lower or increase the chance of December hike (or the trajectory into 2019).
Canada - in addition to the trade talks - has more key events/releases with the Bank of Canada interest rate decision on Thursday and their August employment numbers on Friday. There is only a 10.4% chance of a hike according to Canada OIS market (current rate is 1.5%). The BOC has raised rates twice this year, joining the US as the only country to be on a higher rate path. The consensus is for another hike in October, but the statement and comments from Governor Poloz, could alter that view.
As far as Canada's employment report on Friday, the unemployment rates is is expected to rise to 5.9% from 5.8%. The net change in employment is expected to rise 5.0K vs an oversized 54.1K last month. The full time employment is expected to rise by 35K va -28.0K last month. The part time is expected to fall -30K vs 82.0K last month. Hourly earnings are expected to stay steady at 3.0% YoY.
Other key releases this week:
Monday:
- Australia retail sales is expected to rise 0.3%
- BOJ Kuroda to speak. On Friday they tweaked bond buying.
- UK Manufacturing PMI 53.9 vs 54.0 last
Tuesday:
- RBA rate decision. The RBA is expected to keep rates unchanged at 1.5%. RBA's Lowe will speak.
- UK inflation report hearing. The BOE Governor Carney and several MPC members will testify on inflation and the economic outlook before Parliament's Treasury Committee.
- US ISM Manufacturing PMI for August is expected to fall to 57.6 from 58.1 last month
Wednesday
- Australia GDP QoQ is expected to rise 0.7% vs 1.0% last quarter
- UK Service PMI is expected rise to 53.9 vs 53.5 last month
- Canada trade balances is expected to show a -1.0B deficit vs -0.63B last month
Thursday:
- Australia trade balance is expected to show a A$1450m surplus vs A$1873M last month
- US ADP Non Farm payroll is expected to come in at 188K va 219K last month.
- US ISM non-manufacturing PIM is expected to come in at 57.0 v 55.7 last month
- Fed's Williams speaks
Friday
- In addition to the China trade, the US and Canada employment, the Canada Ivey PMI wil be released.
That does it for the major releases.
