FUNDAMENTAL REVIEW FOR THE WEEK (5 - 9 August 2024)

The week will start on a wave of maximum geopolitical tension. Despite the missile strikes on Israel over the weekend, Iran has not yet interfered, but according to the American news agency Axios, a major attack on Israel is expected on August 5 (insider from US officials).

The week is not rich in important economic reports. The most important report in the US is the ISM index for the services sector, which was released today. Since the indicator turned out to be in the forecast range and above the recession threshold of 50 points, this temporarily reduced fears about a possible economic downturn in the US and strengthened the dollar, although it pales in comparison to the current geopolitical turbulence.

Another important report will be the data on weekly jobless claims, which will be released on Thursday, but due to the approaching hurricane, it may not be as indicative.

There will be plenty of speeches from rank-and-file Fed members this week, with the main task being to explain to the market their inaction at the July 31 meeting. This is the second meeting where they have taken no action, despite a significant decline in inflation in June.

Data from China, such as the services PMI and the trade balance, will be important for investor risk sentiment. The RBA meeting on Tuesday will be all about rhetoric; the statement may drop any hint of a rate hike. On Friday, a Canadian labor market report could impact market expectations for the BoC’s future rate action.

The U.S. Treasury will remove $392 billion in liquidity from the markets this week, with key auctions taking place Tuesday through Thursday.