Monday: US business activity rises

US business activity rises in August as price growth eases. The US dollar settles lower after last week’s Treasury bond market intervention. Stronger inflation boosts Bank of Japan rate hike expectations.

In our deep-dive interview, ANZ Group Chief Economist Richard Yetsenga reviews the US Treasury’s moves last week to bring borrowing costs down, and the implications for Australia and New Zealand.

5 things to know in 5 minutes:

1. There was some good news for the US economy on Friday. August flash PMI data showed business activity accelerated at its fastest pace in four years. ANZ Economist Bansi Madhavani says firms increased hiring, while the pace of price rises also eased.

2. The US dollar finished the week on the backfoot following the Treasury buyback announcement. ANZ Head of FX Research Mahjabeen Zaman says a key event this week for the dollar will be Fed chair Kevin Warsh’s Jackson Hole speech on Friday.

3. Mahjabeen says the US dollar appears to have stabilised at lower levels following the Treasury buyback announcement.

4. Japan’s flash PMI for August remained in expansion mode as new manufacturing orders hit their highest since 2018. Meanwhile, the national CPI rose 1.8% in July from a year ago - faster than June’s 1.6%, and in line with expectations. Mahjabeen says the data support a more aggressive pace of hikes by the Bank of Japan.

5. The key data in Australia this week is July CPI inflation. ANZ Research is forecasting the monthly trimmed mean to rise 0.3%, with the annual rate ticking down to 3.5% from 3.6% in June. ANZ Group Chief Economist Richard Yetsenga says it follows weaker labour market data last week, giving the Reserve Bank of Australia time.

Cheers,

Alex, standing in for Bernard.

PS: Catch you tomorrow with a look at the implications for the Aussie dollar from a stronger or weaker CPI print this week.

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