Coming Up – Riksbanken & RBA on Hold, PMIs and USA Payrolls

Stocholm (Ekonamik) – The coming week will be dominated by the central bank meetings of Riksbanken and the RBA in Sweden and Australia, respectively, and by the publication of payroll and unemployment fgures in the USA and Canada.

The RBA is unlikely to tweak its rates again following its rate cut at the beginning of June. Johan Löf, Senior Economist at Handelsbanken expects the Riksbank to “stay on hold, and also keep a near-term hike in its repo rate path, although the probability of this will be toned down. We also expect more tweaks to the Riksbank’s forward guidance, with a slight flattening further out the repo rate path.” The economist reinterates that Handelsbanken continues to forecast “no further Riksbank hikes in 2019-21.” Analysts at Swedbank agree that Riksbanken will “sit tight“. “Global downside risks have risen since April and several leading central banks have become markedly more dovish. This will probably affect next week’s Riksbank decision,” the Swedish bank argues in its SEK Rates Weekly publication. “The Riksbank at the same time can see that the Swedish economy continues to chug along and that inflation is developing as expected. Taken together, we expect the repo rate and repo rate path to be left intact, but that the downside risks will be stressed. The risk is that the Riksbank will lower the path, mainly in a longer horizon.”

As for the payroll and unemployment data for the USA, the increase in initial jobless last week reportedly exceeded analysts expectations. However, jobless claims are much noisier than non-far payrolls, so inferences are not obvious.

Otherwise, the week will begin with the publication of Manufacturing PMI data updates around the globe before Composite PMIs are published in the middle of the week.