Analysts at UOB Group explained that for this upcoming week, geo-political risks will again dominate the headlines following the 6th and by-far the most powerful nuclear test by North Korea on Saturday (2 Sep).
Key Quotes:
"As for central bank from G7, there will the Bank of Canada (BOC) (6 Sep) and the European Central Bank (ECB) (7 Sep) with monetary policy decisions among the G7 economies. According to Bloomberg (as of 5 Sep), only 5 out of 26 forecasters expect BOC to hike rates by another 25 bps to 1.0%.
Meanwhile, we expect the ECB to keep monetary policy status unchanged but the Governing Council may start discussing plans to normalize monetary policy in the form of slowing its asset purchases gradually.
As for the US Federal Reserve, there will be Fed Beige Book report in the midweek (6 Sep) and several FOMC voters speaking in public forums this week (including Brainard, Kaplan & Kashkari on 5 Sep, and Dudley on 7 Sep) but no sight of FOMC Janet Yellen yet. Atlanta Fed President, Raphael Bostic will also be in his public forum since assuming office in March. He is non-voter in 2017 FOMC but will rotate into a voting role in 2018. Note that the US and Canada will have a long weekend as they celebrate Labor Day on today (4 Sep).
After the Labor Day holiday, market attention will very quickly return to US domestic politics as the US Congress will reconvene on 5 Sep (Tues) after their August recess.
The disastrous Hurricane Harvey may have helped “convince” US Congress to avoid a US government shutdown and a fight over raising the debt ceiling limit this month as the Congress may combine emergency aid for Harvey victims in September with stopgap government funding and a debt limit increase.
Attention will be on the damage to Texas, US, in the aftermath of Hurricane Harvey and as reports estimate the cost of damages by Harvey range widely from US$50bn to US$190bn, and could well exceed that of Katrina (2005) which was at US$125bn (US$160bn in current dollars).
As for the data docket for the developed economies, we look forward to US July factory orders and durable goods orders (5 Sep), Japan Jul labor cash earnings (6 Sep), US July trade balance (6 Sep), and the final print for Japan’s 2Q GDP (8 Sep)."
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