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Week Ahead – RBA debates taper delay, Russia to hike rates, and ECB to maintain PEPP increase



The August nonfarm payroll report showed the delta variant hit to the economy is just beginning.  Investors are now pricing in a weak September payroll report, which will make the October report the key one for deciding if we get a November Fed taper.  Now the focus for markets will tentatively go back to inflation and to see if these supply chain issues continue to lead to higher prices.


Next week is all about Fed speak.   Wednesday, Fed’s Williams speaks on the economic outlook and Kaplan holds a virtual town hall meeting.  Thursday, Fed’s Daly discusses economy equity, Evans speaks, Bowman talks about community banking, and Williams gives opening remarks at a conference on racism in the economy.  On Friday, Fed’s Mester speaks at the Bank of Finland conference.  Investors will get a better handle over tapering expectations and over how much more concerned they are with inflation.


It is a quiet week for economic data, with traders primarily focusing on Wednesday’s JOLTS job openings reading for July, Thursday’s weekly jobless claims, and the main event on Friday with the release of August PPI Final demand data.  


ECB meetings are about to get far more interesting. Under pressure from hawks within the committee, the ECB appears set to start reducing its bond purchases with some suggesting an announcement could come as early as this month. Euro area yields have been rising, seemingly in anticipation of such a move.

Any announcement is likely to be wrapped in dovish language and promises to prevent an unwanted tightening. Even if an announcement isn’t forthcoming next week, the language from the central bank and Christine Lagarde will be key to the market reaction.


A relatively quiet week ahead for the UK, dominated by tier two and three data, the only one of note being the monthly GDP reading on Friday.

With so many central banks in the process of deciding the best time to pare back pandemic-era stimulus measures, the focus will be on comments from policymakers including Catherine Mann and Michael Saunders on Tuesday.

Emerging Markets


The Central Bank of Russia meets on Friday and is expected to raise interest rates by at least another 25 basis points to 6.75%. This comes after inflation rose to 6.79% y/y compared with 6.68% a week earlier and well above the central bank 4% target.

South Africa

The rand has been on a strong run over the last couple of weeks, buoyed by improved risk sentiment in the markets, but that stalled heading into the US jobs report.

Next week sees the release of second-quarter GDP data which is expected to show growth of 2.5% on a quarterly basis.


Inflation posted another surprise increase as food prices surge, complicating what the central bank will do with rates.

The country grew by 21.7% in the second quarter, in line with market expectations. Next weeks data highlight will be the unemployment rate which stood at 10.6% in June.

Asia Pacific


Soft PMI data the past week has shaken confidence in the China recovery but the real damage has been done by the procession of government clampdowns on various sectors in the name of “common prosperity.” There seems to be a new one each day and the net result implies that China equities remain perilous to buy on dips. That light at the end of the tunnel is the CCP train coming the other way.

China’s trade balance and inflation data will garner the most attention next week but will be secondary to the market reaction from the US Non-Farm Payroll data and whichever sector lands in the CCP’s spotlight inthe week ahead.

A much higher Non-Farm Payrolls figure will put pressure on the Yuan and other Asian currencies as the Fed taper moves back into the spotlight.


India appears to be the major recipient of diverted China flows at the moment, with the INR and stock market rallying impressively. Much improved GDP lifted spirits in the past week and short of a major upside surprise in US employment data, much the same should continue in the week ahead.

The data calendar is quiet with Industrial Production and Manufacturing on Friday expected to show the lingering effects of India’s latest Covid-19 wave.

Australia & New Zealand

Australian markets continue to shrug off the extended lockdowns in NSW and Victoria, but noises are increasing about the knock-on effects in the Q3 data with the Lucky Country potentially falling into a recession for Q3. With millions of vaccines on the way though, I expect the negativity to be shallow as the domestic economy should rebound quickly on reopening.

All eyes will be on the RBA policy meeting on Tuesday where the RBA will remain uber-dovish and potentially will postpone their QE tapering plan. That will be good for local equities. AUD continues to outperform as global risk appetite bounces back, only a sharply higher Non-Farm Payrolls will derail further AUD rallies in the week ahead.

New Zealand eased the national lockdown ex-Auckland and cases have been trending lower nationally. That has seen the Covid-19 sell-off in NZD almost entirely reversed and if cases in Auckland continue to fall there is potentially another 200 points of upside for NZD/USD inthe week ahead.

The data calendar is quiet but noise around the RBNZ now hiking in October will be supportive of the currency as well.


Japan continues to struggle with an upsurge in Covid cases, and the state of emergencies will hamper economic growth. The main victim of the poor response has been PM Suga who announced he would not stand as leader in the forthcoming election, due by October. That has led to a massive surge in the Nikkei 225 as markets priced in a renewed wave of fiscal stimulus, coming on comments from a BoJ official this week that the central bank stands ready on monetary policy support as well.

USD/JPY is trading sideways as it remains a purely US/Japan yield differential play. Equities, however, could continue moving higher if the stimulus momentum continues. We will have to see who emerges as a potential replacement to PM Suga. As is the case elsewhere, markets continue to ignore the dire virus situation domestically and its impact on domestic consumption.

Japan has a packed data calendar this week including Household Spending, Q2 GDp and MAchine Tool Orders. All eyes, though, are likely to be on The Diet and the new leader and the likelihood of nw stimulus measures.



The energy market continues to deal with the lingering effects from Hurricane Ida.  Gulf of Mexico production is struggling to restart, power outages remain, and inspections are still being done to make sure it is safe for workers to return to offshore facilities.  The primary focus will be on how quickly production returns and if the economic slowdown leads to a bigger hit to the short-term demand outlook.


Gold is potentially on the verge of a major bullish breakout.  A lackluster employment and rising wage pressures has gold rallying towards massive resistance.  The Fed’s job will be much harder now that the economy is slowing and inflation intensifies.  Gold might have a small window to break above the $1850 level before investors jump back on the bond market selloff trade.  Gold trading should remain volatile for the remainder of the month.


Bitcoin weekend volatility could see another surge after prices tentatively broke above the $51,000 level.

All eyes will be on Bitcoin’s historic moment of becoming legal tender in El Salvador.  The Bitcoin law is effective on September 7th, but how strong adoption is over the coming weeks could impact how quickly other countries will follow suit.  Bitcoin will work alongside the dollar in El Salvador, but a successful launch in use could be what is needed to help Bitcoin break out of its recent trading range.

Key Economic Events

Saturday, Sept. 4

– The European leaders meet for Annual Ambrosetti forum continues in Cernobbio, Italy

Sunday, Sept. 5

– Informal meeting of European Union agriculture ministers in Slovenia

Monday, Sept. 6

– US markets are closed for the Labor Day holiday

– US President Joe Biden expected to renominate Fed Chair Jerome Powell to a second term.

– US Federal emergency unemployment benefits expire today

– Informal video conference for EU economy and finance ministers

Economic Data/Events:

Tuesday, Sept. 7

– Bitcoin becomes legal tender in El Salvador

– German Chancellor Angela Merkel to speak at IAA Mobility trade show

Economic Data/Events:

Wednesday, Sept. 8

-Dallas Fed President Kaplan holds a virtual town hall discussion.

Economic Data/Events:

Thursday, Sept. 9

– Riksbank Governor Ingves speaks at SVD Bank Summit

– Bank of Canada Governor Macklem delivers the Economic Progress Report

– German Finance Minister Scholz speaks at the Handelsblatt Banking Summit.

Economic Data/Events:

Friday, Sept. 10

– Informal meeting of EU economic and financial affairs ministers in Slovenia.

– ECB Governing Council Member Rehn speaks at monetary policy conference.

Economic Data/Events:

Sovereign Rating Updates:

– Austria (S&P),

– Luxembourg (S&P),

– Norway (S&P)

– Portugal (S&P)


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya