The Week Ahead: Central Banks In Focus

Expectations are generally high ahead of any G20 summit. But often the outcome at the end of the two-day meeting falls woefully short of those lofty hopes.

This year’s G20 meeting in Hangzhou is unlikely to be any different. The Group of 20 countries might talk a good talk. However, they are unlikely to resolve slow global growth in the space of a couple of days’ worth of chin-wagging, given that many G20 leaders face far more pressing issues at home.

Following the closely-watched US Non-Farm Payroll numbers this week, the next port of call for data watchers could be the US Labor Market Conditions Index. It could provide more insight into the US jobs market and the Fed’s thinking regarding interest rates.

A number above 0 could be seen as a sign of health for US employment. The upshot could be a greater chance of a US rate rise this month. Look out for reaction from Singapore banks that include DBS Group (SGX: D05), UOB (SGX: U11) and OCBC (SGX: O39).

Further signs of China’s ability to rebalance is slowing economy could be on show with the Caixin Services Index on Monday. It unexpectedly fell last month, which set tongues a wagging that Chinese consumers had run out of steam (or money) to drive the much-needed economic transformation.

China will also report its latest Balance of Trade. Whilst China’s trade is in surplus with the rest of the world, it is only because imports are falling faster than exports. Neither is a good sign for the global economy.

The European Central Bank has an interest-rate decision to make next week. Last month it left interest rates unchanged at 0%, while it assessed the impact of Brexit. Other central banks that have to make an interest-rate call include the Reserve Bank of Australia, the Bank of Korea and the Central Bank of Malaysia.

And finally, Monday is Labor Day in the US. So global markets will have to make up their own minds as to whether they should rise, fall or just sit on the fence, whilst US traders take a day off from work.

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