• SUN: NZ Trade
• MON: UK Bank Holiday, German IFO, US Durables, Dallas Fed Manufacturing Business Index
• TUE: German GDP (2nd), Hungarian Rate Decision, US House Price Index, S&P Case-Shiller, CB Consumer Confidence, Richmond Manufacturing Index
• WED: GFK Consumer Climate, EZ M3 Money Supply, Israeli Rate Decision
• THU: NZ ANZ Business Confidence, Australian CAPEX, German Import Prices, Norwegian GDP, German Labour Market Report, Eurozone Consumer Confidence, German CPI (final), US GDP (2nd), Good Trade Balance, Pending Home Sales
• FRI: Tokyo CPI, Japanese Industrial Production, South Korean Rate Decision, Australian Building Approvals, German Retail Sales, Norwegian Labour Market Report, EZ CPI (flash), Italian CPI & GDP, US Personal Income & Spending, Core PCE Price Index, Canadian GDP, Chicago PMI, University of Michigan

G7 LEADERS’ SUMMIT (WEEKEND):

The G7 leaders’ summit in Biarritz over the weekend will likely set the tone for trade, after a neutral set of comments from Fed's Powell, and after President Trump ramped up trade tensions with China with punchy rhetoric on Friday (which followed China's announcement of a retaliation against US trade measures). Although topics for discussion will be wide-ranging (trade risks, global economic growth, geopolitical tensions in the South China Sea and the Indian Peninsula, and even the environment). Traders will naturally be focussed on comments around trade, expected to be discussed on Sunday; prospects for a de-escalation of tensions are few and far between, particularly in light of Friday's events between US and China. There will also be attention on whether Trump focuses his trade crosshairs on the Europe, and Trump's criticism of France's digital tax, which will impact many US tech giants.

US JULY PERSONAL INCOME/SPENDING/PCE (FRI):

In the FOMC's recent meeting minutes, the central bank stated that participants were anticipating inflation will move up to its 2.0 objective in the medium term. The street is expecting core PCE to rise by 0.2% M/M, matching the prior months' pace; the Y/Y rate is seen ticking up to 1.7%. The recent consumer prices data for June has offered some optimism about a possible upside surprise. Meanwhile, the personal income and consumption will give us insight into the health of the consumer - which some Fed officials are paying close attention to. Spending is seen +0.5% M/M and personal income seen rising +0.3%; the data will follow what were deemed solid retail sales in July, once again adding to the positive start for consumption in Q3. 

US AUGUST CONSUMER CONFIDENCE (TUE):

Consumer confidence rose to an 8-month high in July, and the prior was revised higher showing that consumers are more optimistic about business and labour market conditions. Oxford Economics noted that this positive reading will support consumer spending in H219 and that despite global headwinds, the core of the US economy remains strong.

US Q2 GDP (SECOND READING) (THU):

There are slight risks that GDP metrics could be revised lower, in the second reading. The advance print showed US GDP growth for Q2 came in at 2.1%, above consensus estimates for 1.8%. The prior reading, of 3.1% in Q1, remained unrevised. The core PCE deflator was 1.8%, below consensus for 2.0%, and the GDP deflator printed at 2.4%, higher than consensus of 2.0% (and the prior 1.1%). Growth in H1 19 averaged 2.6%, Pantheon note, above the 5-year average, despite the diminishing fiscal boost from 2018’s tax cuts. Consumer spending rebounded from Q1’s sluggish 1.1% to grow at 4.3% in Q2 and government spending went up 5%; offsetting negative contributions from in business fixed investment, trade and inventories. Pantheon expect both consumption growth and soft business investment to mean revert in H2 and forecast Q3 GDP at between 2-2.5%. On the weak core PCE deflator print, and it suggests that either downward revisions to April, May and/or a very soft June reading relative to the core CPI; with the former seeming more likely. 

CHINA AUGUST MANUFACTURING PMI (SUN):

Bank of America says it expects the China manufacturing PMI to edge down in August, to 49.5 form 49.7 in July; the bank blames escalating US/China trade tensions hitting sentiment of purchasing managers. "High frequency growth data weakened again in August, with sequential industrial prices decreasing moderately," the bank adds.

ITALY (TUE):

Italian President Mattarella said new elections is a choice that cannot be taken lightly; some parties he has spoken to said they are working towards a deal to create a coalition, but needed more time. Mattarella says new consultations will be held on Tuesday. Meanwhile, the PD party is willing to enter a coalition government with the 5SM, and on Friday, there were constructive comments from both groups – including PD accepting 5SM’s demands to cut the number of lawmakers. The PD’s willingness to reach an agreement with 5SM increases the chances that the two parties can form a coalition, which would avert the need for early elections. That said, analysts note that the PD’s demand could still prove to be a source of friction since they are likely incompatible with the 5SM position. The PD’s offer seems to be premised on five conditions, including loyal membership of the EU, giving Parliament a central role, and a reversal of Lega’s anti-immigration policies; PD has also said that the 5SM must not resurrect its coalition with Lega. One of the sticking points for a coalition would then be who would become prime minister, the BBC reported, since neither PD leader Zingaretti nor 5SM leader Di-Maio have shown any interest in the job, questions remain regarding who would lead the coalition. If the two parties fail to reach a deal, autumn elections appear likely, which raises the possibility that the Lega will storm the vote, becoming the largest party in Parliament – a scenario that analysts have said could put pressure on Italian assets. Meanwhile, League Leader Salvini rolled back on some of his hostility and floated the idea of a reviving the League/5SM coalition, under the conditions that 5SM adopt a more constructive attitude to League’s policies. In the case the parties fail to form a coalition, Italy will be facing new elections. Despite the latest developments, analysts at ING remain sceptical on a new coalition, and thus state “the option of snap election in October or early November remains on the table,” a scenario that is expected to be positive for the Lega.

EZ CPI

The main highlight on the data slate from the region will be latest inflation metrics from the Eurozone on Friday with headline Y/Y CPI forecast to remain at 1.0% with the super-core reading expected to tick higher from 0.9% to 1.0%. Ahead of the release, RBC look for little in the way of change for the August metrics from the priors, however, going forward, RBC notes “the deterioration in euro area growth and the impact that it has on inflationary pressures within the euro area that is the ECB’s real concern at present”. With this in mind, the Canadian bank looks for the ECB to unveil a “significant policy package” next month which would be in-fitting with recent comments from policymaker Rehn who himself called for an “impactful and significant” easing package. At the time of writing, markets currently fully pricing in a 10bps cut and around 28% chance of a 20bps cut.

BOK PREVIEW (FRI):

The Bank of Korea is expected to maintained its policy rate at 1.50%, and there are also expectations that its decision may see dissent. Analysts at SocGen say that incoming data supports the case for a further rate cut: "activity data suggests slower growth after the pickup in 2Q19, while exceptionally low inflation is continuing and household credit growth is stabilising," the bank says, but also notes that "anticipation of coordinated policy easing by central banks is rising amid deterioration in the US-China trade war and the global market’s risk-off trading." Nevertheless, SocGen, does not expect a back-to-back rate cut: "Concerns about the housing market have resurfaced as Seoul housing prices are showing signs of a rebound, people are starting to worry about excessive Korean won weakness, and the BoK policymakers will become more reluctant about easing as the policy rates approach the effective lower bound (which is probably around 1.0%, the bank estimates). However, the meeting may give insight into whether the BOK will follow up its previous rate cut any time soon. SocGen says it sees two more 25bps rate cuts, in October, and then in Q1 of next year