A comedown from the first week of the month ahead, where the frequency of major economic announcements becomes a little thin on the ground. Nevertheless, the hope is that there should be enough to keep the markets bubbling along nicely.

The major event of note from the US region is certainly going to be the release of the Fed’s minutes from the June FOMC meeting.Meanwhile, the BoE monetary policy announcement on Thursday is set to dominate proceedings in the UK. Also on Thursday, the ECB releases it’s monthly bulletin which will most likely form the only major event to watch out for in the Eurozone region.

In Asia, the one figure I will be paying particularly close attention to will be the Chinese trade balance figure to note how export and import growth is advancing as the economy moves out of the recent slowdown. And finally, the outlook for Australian employment comes back into focus on Thursday when the jobs report is released.

US

A quiet week ahead in the US, where the release of the minutes from June’s FOMC meeting marks the real event of note to watch out for. Given the evident improvements within the US economy in recent months, there is a growing emphasis upon whether we will see the likes of asset purchases or ultra low interest rates brought to a halt earlier than expected.

The meeting back in June poured cold water on this somewhat with the announcement that under a broader assessment of indicators, the Fed believes an underutilisation in the labour market is still prominent. Given the less impressive jobs report released in June compared to the one released this month, it is unlikely that the Fed will get too carried away.

Ultimately the issue on everyones mind is going to be the interest rate decision, with the asset purchase pathway seemingly set to come to an end later this year. Thus look out for any indications of a shift in emphasis with regards to the interest rate hike. However, with a slowdown in the May payrolls along with continued sub 2% inflation, I believe we are less likely to see it happen on this occasion.

UK

A similarly thin week ahead for the UK, where Tuesday’s release of the manufacturing production figure and the BoE monetary policy announcement represent two of very few events. On Tuesday, the manufacturing production figure is hoping to follow the lead of the recent manufacturing PMI figure, which saw a surge in demand leading the indicator to a 7 month high.

The production figure is the end product of surveys such as the PMI and ultimately allow us to know whether the goods are actually being produced. The strength seen in the manufacturing sector has been portrayed well through this figure, where monthly swings between growth and contraction has now given way for 5 consistent months of growth. This trend is expected to continue yet again this week.

Forecasts point towards a moderate rise from 0.4% to 0.5% which would reverse the slowdown in the rate of growth seen in the past two months. Thus anything above 0.4% would be very positive and could point to yet another boost in the sector.

On Thursday, the latest monetary policy decision from the BoE is expected to bring few surprises despite our previous experience of this being one of the biggest events of the month for the UK economy. As things stand, we do not expect to see rates rise anytime soon, despite rumours of the timeline being brought forward to within 2014.

Mark Carney is very unlikely to use this forthcoming meeting to change the interest rates or asset purchase facility which means it will most likely be somewhat of a non-event. Realistically we are awaiting further hints that the interest rate hike could come earlier than expected, yet typically that would happen either with the release of the minutes or discussions from the Carney himself. Thus, whilst this event is always worth looking out for, I do not expect any fireworks.

Eurozone

Yet again, not too much to move the markets in the Eurozone, where the ECB monthly bulletin is the major event of note. Due out on Thursday, this release typically addresses issues such as the threat of deflation and how the monetary policy stance of the ECB is likely to impact their targets going forward.

Given the plethora of policies implemented by the ECB last month, it is likely that we will see a more upbeat bulletin with expectations of a gradual increase in CPI over the remainder of the year.

Asia & Oceania

China is the focus for the Asian region, where the release of trade balance data on Thursday is going to be the mainstay of attention for the markets. Given the reliance of the Chinese economy upon exports for growth, the ability to import raw materials and export finished products is the basis for a prosperous economy.

With the PMI figures picking up, the signs are there for more positive trade figures going forward. The official manufacturing PMI index saw new orders at the joint highest level in more than two years. This gives me confidence that we will start to see those figures reflected within the exports and imports in the near future, paving the way for a pickup in growth prospects.

In Australia, the jobs report brings insight into how their economy is faring in a period which saw a drastically lowered trade balance and retail sales figures. The Australian economy on the whole has actually fared better than many expected given the weaknesses evident within China over the past 6 months. This has been reflected in the Australian dollar which has been rising accordingly.

However, with some questioning whether the poor trade balance will signal a break lower in employment. This is unlikely to be the case, where this figure has been skewed massively by the falling price of iron ore. This has come despite increasing volumes which to me means the likeliness of higher employment yet potentially lower wage growth. In line with this, the expectations point towards a rise in employment by 12.3k from the -4.8k last month.

This is offset by a forecasted rise in the unemployment rate to 5.9%. In the past when we have seen such contrary moves, it reflects a possible rise in the participation rate which in itself is a good thing. However, it is yet to be seen and typically when the market moves significantly from such a release, it will be driven by both measures moving positively or negatively. In this case I expect to see the unemployment rate remain steady whilst the change post an above zero figure.

DISCLAIMER: Any views or opinions presented within this e-mail are solely those of the author and do not necessarily represent those of Alpari (UK) Limited, unless otherwise specifically stated.