Other Stats
Construction work done (Wednesday) and private sector credit (Friday) figures will also draw investor interest. However, the reports will likely play second fiddle to the inflation and retail sales data.
China Industrial Profits and the Aussie Economy
On Tuesday, August 27, industrial profit figures from China could impact buyer demand for the Aussie dollar.
Economists predict industrial profits will rise by 3.3% year-to-date, year-on-year, in July, down from 3.5% in June.
Lower industrial profits may signal a weakening demand environment, negatively affecting Australian trade terms and the Aussie dollar.
China accounts for one-third of Australian exports, with Australia having a trade-to-GDP ratio of over 50%. Additionally, 20% of the Australian workforce is in trade-related jobs.
A weaker labor market could affect wage growth, reduce disposable income, and curb consumer spending. A pullback in spending may dampen demand-driven inflation and affect the economic outlook. Private consumption contributes over 50% to GDP. A softer inflation and economic outlook could fuel speculation about an RBA rate cut.
Expert Views on China’s Demand for Steel and Production
AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on the Chinese economy, stating,
“China new property sales remain weak as does steel demand and production.”
US Economic Calendar
It could be another crucial week for the US dollar as investors speculate about the size of a possible September Fed rate cut.
Consumer Confidence and the US Economy
The CB Consumer Confidence Index will influence US dollar demand on Tuesday, August 27.
Economists forecast the Index to drop modestly from 100.3 in July to 100.1 in August.
A larger-than-expected drop in consumer confidence could signal a sharp fall in consumer spending. Downward trends in consumer spending may affect the US economy as it contributes over 70% to GDP.
Initial Jobless Claims
The US labor market will face scrutiny on Thursday, August 29.
Economists predict initial jobless claims to increase from 232k in the week ending August 17 to 234k in the week ending August 24.
A spike in jobless claims may retrigger speculation about a possible US hard landing. Deteriorating labor market conditions could impact wage growth, possibly curbing consumer spending.
