The Week Ahead

During the week ahead the market is likely to look towards a number of key market themes and events which have the potential to indicate financial market moves.

The economic calendar is jammed packed with important events and releases this week. The release of the US ISM Survey, US jobs report, FOMC minutes, and RBA rate decision headline.

RBA Rate Decision

The Reserve Bank of Australia will meet next week to decide on rates and economists forecast data shows a spilt, with half calling for a 25-basis point rise and the other half predict a pause at the current.

Moreover, the RBA has lifted its cash rate a total of 4 full percentage points since it started tightening policy in May 2022, the fastest pace in decades.

Among the big four banks, the ANZ and Westpac both expect the RBA to hike rates by another 25 basis points in July and August.

Another surprise hike cannot be ruled out as inflation remains a distance from the central bank’s 2-3% target range and considering that the central bank has gone against the consensus for a pause at the last two meetings.

Non-Farm Payrolls

More mixed jobs gains are forecast this week as the consensus currently looks for 200,000 payrolls to be added. This would be a steep drop from the 339,000 jobs previously added.

Accordingly, the US unemployment rate seen unchanged at 3.7% and the US Average hourly earnings are seen rising 0.3% month on month, matching the rise seen in May.

Recently, ratings agency Moody’s said that while it expects to see continued signs of labour market cooling from the data, it likely will not be enough to keep the FOMC from restarting rate hikes in July.

Moody’s also notes that it receded in the latest week, although the four-week average remains close to the break-even level, adding that it will be important to note any sustained increase in the level of claims as it would likely signal a deceleration in monthly job gains.