End of week eyeing the week ahead

Friday Evening

Last week ended on a positive note, following Federal Reserve Janet Yellen's speech at the central banking symposium in Jackson Hole. U.S. financial system is "more resilient" and "better prepared" for shocks than a decade ago when the crisis struck. The Fed Chairman remarked memories of the events and their costs "may be fading". She also emphasized the fact that large banks hold more high-quality liquid assets and the FED is making a good progress on its dual goal of employment and inflation.

Following the news, the U.S. Dollar traded in the red, whilst gold pared its losses to trade in the positive territory, while US government bonds were mostly higher as well. Furthermore, markets also reacted on hopes that U.S. President Donald Trump will manage to deliver the much-anticipated tax reforms.

Oil Prices were up on Friday, as Hurricane Harvey, possibly the biggest hurricane to hit the US mainland in over a decade approaches the Gulf of Mexico coast, potentially endangering the heart of the nation's oil industry. US oil producers in two major oil refining center Houston and Corpus Christi, prepared for the impact, stopping the production, thus pushing the prices up as a result.

The Week Ahead

US jobs data dominate next week, offering insights into FED policy. The expected job creation is aimed at 185,000 in contract to the 209,000 a month earlier. The expected jobless rate forecast to remain at 4.3% in line with the previous month. Meanwhile, latest unemployment and inflation data for the euro area will be monitored for confirmation of the region's upturn.

Also in the frame will be purchasing managers index (PMI) from the UK, US, and China, with the latter being particularly notable. Flash PMIs for the US indicated that while growth in business activity gained momentum, heavily helped by the services sector, the manufacturing output growth slowed, thus softening US manufacturing data.

Focus on the European Central Bank (ECB) is also expected, awaiting the manufacturing PMI numbers, alongside euro area surveys on business and consumer sentiment as well as inflation figures. Flash PMIs signaled a steady Eurozone economic growth together with a pick-up in price pressures, which are welcome news for the ECB, but a concern on the Euro strength still remains.

Big earnings are thin on the ground, although a handful of companies still have to report their earnings and this should provide something to chew over. Markets are also awaiting the resumption of ‘normal service’ in markets with the first full week of September. 

Disclaimer:

This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.