Asia week ahead: Fed-speak, non-farm payroll, PMI

First week of a new month brings key data releases. 

The Fed
Source: Bloomberg

Traders will be watching out for them given current market themes.

What Fed Janet Yellen says or doesn’t say tonight at the Jackson Hole symposium would influence the financial markets next week. The main point is whether she is on the same hawkish page as her second-in-command, Stanley Fischer. If she is hawkish, then we could see dollar bulls come out in droves, albeit cautiously, as they look ahead to next Friday’s payrolls data. The consensus estimate is for an addition of 180,000 jobs in August, down from 255,000 in July.

After the forward-looking durable goods orders provided some optimism about business confidence, investors would want to keep an eye on the US labour market to assess the likelihood of further rate hikes. This is especially pertinent if Yellen asserts tonight that the Fed will continue tightening policy this year.

A number of Fed officials will be speaking next week, including Eric Rosengern (voter), Loretta Mester (voter), Neel Kashkari (non-voter) and Jeffrey Lacker (non-voter).

 

Purchasing Manager Index (PMI)

The monthly round of private sector manufacturing PMIs will be due next Thursday, 1 September. The focus is on China, where the official NBS PMI will be released before the Caixin-Markit PMI. Economists are expecting a slight contraction in August at 49.9 for the official PMI, and a slight expansion at 50.2 for the Caixin PMI.

The mixed picture between the two PMI results gave an overall impression that the China’s manufacturing activity continues to stabilise, supported by state stimulus. That there is no rebound in sight is the underlying message. As long as the manufacturing sector is not deteriorating markedly, Beijing is probably content to keep its stimulus in place, without adding further support.

Investors would be also interested in Japan’s PMI, as well as other high-frequency data, including industrial production, capital spending, and retail sales.

In Asia, onshore markets in Philippines will be closed on 29 August, Malaysia on 31 August, and Vietnam on 2 September.

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