Events to Watch: RBA, UK PMI Manufacturing, US ISM Manufacturing

RBA meeting - September: While it's widely anticipated that the RBA will keep its policy rate unchanged for the 5th consecutive month at 3%, the timing of the first tightening may come earlier than previously expected. Given the strong data flows in these 2 months, there's a possibility that the RBA will start increasing interest rate in 4Q09, compared with previous consensus forecast of 1Q10.

Housing finance has risen for 9 consecutive months while building approvals increased sharply in June. Moreover, consumer and business confidence have also improved significantly. It's highly likely for further upside surprise to be seen from the macro side.

HSBC, while forecasting rate hikes will begin in the second quarter of 2010, said the timing 'could be brought forward by several months if the data continue to surprise on the upside'. JP Morgan dragged forward the expected timing of the first rate hike to October this year from February 2010, given unexpected bounce in firms' investment plans as well as other strong economic data. Citigroup even said that there's possibility for the RBA to announce a rate hike at September's meeting.

UK manufacturing PMI - August: After rising above 50-level for the first time since April 2008 in July, further improvement to 51.3 is expected to be seen in August. Recovery in global economic activities and decline in the British pound have helped the manufacturing sector in the UK

US ISM manufacturing - August: The index should have risen to 51 in August, indicating expansion in the sector, for the first time since January 2008. As a leading indicator, new orders index jumped to 55.3 in August. Moreover, durable goods orders also surged almost +5% in July. These are signs that the sector in recovering. Regional surveys released generally showed improvements in August. For instance, the Richmond Fed index increased to 55.9 from 54.5 while the Empire State Index rose to 48.7 from 44.5.