This is the first full week of the weakest and most time of the year for world markets, with earnings season now over and summer vacations in the Northern Hemisphere well underway.
There are a few significant events that have the potential to move markets. First up is the Solar Eclipse taking place across North America on Monday. Although I’m not convinced astronomical events can have an impact on market sentiment, the eclipse could distract traders from the events at hand and we could see odd moves around the event.
Defensive plays like gold and JPY, meanwhile, could be more active around any events related to the US and South Korea holding military exercises as tensions with North Korea are still running high.
Canadian Bank Stocks may attract some attention mid-week with RBC and CIBC reporting. The shares of both banks have been flat for the last three months, so expectations appear neutral. Comments on the impact of the slowing Toronto housing market could be of interest to the street. The Bank of Canada raising rates in July was seen as a vote of confidence in the Canadian economy and traders may look to the banks for confirmation or rejection of this positive outlook.
The US Dollar, Euro and other currencies may be particularly active at the end of the week. The Fed’s annual Jackson Hole conference starts Friday, a forum Fed chairs often use to hint at significant policy changes. This year, traders will be looking for hints of whether the Fed intends to start running down its balance sheet in September or later (I think later due to coming budget turmoil). Indications of whether the next rate hike is expected later this year or in 2018 may also move forex markets.
Economic/Political news (North America time):
Monday US-South Korea start joint military exercises
Solar eclipse across North America
Tuesday Canada retail sales
Wednesday Flash manufacturing PMI reports for US, Germany, France
Wednesday evening Flash manufacturing PMI for Japan
Thursday UK GDP update
Friday-Saturday FOMC Jackson Hole Conference
Wednesday Royal Bank of Canada
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