Friday preview: UK industrial and trade bundle a hors d'oeuvres for US nonfarm

US non-farm payrolls are the big market event for Friday, but closer to home balance of trade, Halifax house price numbers and industrial production make it a fairly busy day on the economic calendar, with retailer Dunelm issuing a trading update.

Not long after London traders return from lunch, the US Labor Department is expected to announce that job growth in the US ran at close to a 180,000 person pace in June.

"This would suggest the labour market is continuing to tighten, giving further ammunition to the hawks on the Fed that argue that inflation will ramp up," said market analyst Craig Erlam at Oanda.

The previous session saw some downside surprise for the ADP employment data, falling to 158,000 from 230,000 and below the consensus forecast of 185,000, which sent the dollar lower.

"What this says is that the appetiser for tomorrow’s main event is not great," said analyst Naeem Aslam at Think Markets.

"The ADP number has some correlation to the US NFP and investors always adjust their expectations on the back of this. But overall we think that number is not that bad at all because this is the only second time that we have seen a miss.

However, Aslam said that the "whisper number" is lower at 165,000 than the consensus forecast of and this sets the bar much lower. If we fail to break this, the result for the dollar would be detrimental. It would also create a major uncertainty in the market as investors would question the current interest rate hike by the Fed.

We’ll also hear from three Federal Reserve policy makers on Friday, with vice Chair Stanley Fischer, Jerome Powell and John Williams all scheduled to appear.

"The minutes from the last FOMC meeting did little to support the greenback, with the lack of inflationary pressures appearing to be taking its toll on the appetite for more rate hikes, among some policy makers," said Erlam.

"That suggests to me that, while one more rate hike may come this year – perhaps in December – the pace beyond then may slow, with the focus then turning to the balance sheet. Of course, should inflation move towards 2%, as remains the assumption of the committee, the pace of tightening may increase with it."

UK FOCUS

Alongside industrial production numbers from Germany and France, expected to decline and improve on a monthly basis respectively, there will be official industrial output data for the UK.

Industrial production made a weaker-than-expected start to the second quarter, rising 0.2% month-on-month in April, which was short of the consensus 0.7% rise as manufacturing production only rose 0.2% after falling the month before that.

The consensus for May's numbers is for manufacturing and industrial to both rise 0.3% m/m.

HSBC economists anticipated a further "steady, if unspectacular expansion" in manufacturing in May of 0.2%, which will lift the yearly rate to 0.8%.

Issued by the Office for National Statistics at the same time are May's trade deficit, which a month before narrowed to £2.1bn from a £3.9bn shortfall in March.

The data offers some scope for optimism that past falls in sterling are beginning to boost net exports, HSBC added, with much of March's improvement in the goods deficit.

"We think there is some further net trade boost to come. Consistent with that, we anticipate a further narrowing in the overall trade deficit, to £1.8bn, in May."

Elsewhere on Friday, the G20 summit in Hamburg offer the potential for plenty of news, notably around the planned meeting between US President Donald Trump and Russian counterpart Vladimir Putin, and from potential violent protests.

COMPANY NEWS

The homewares retailer Dunelm reports its pre-close update amid a challenging market backdrop.

Barclays analysts expect that to be reflected in Q4 trading update, "but we do not believe this detracts from its long-term strategic story."

On a full-year basis, Barclays factors in full year like for like sales falling 1.5%, which implies Q4 LFLs of -0.2% based on the last three quarters of -3.8%, +0.2% and -2.2%.

Friday July 07

UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
Halifax House Price Index (08:30)
Industrial Production (09:30)
Manufacturing Production (09:30)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Industrial Production (GER) (07:00)
Unemployment Rate (US) (13:30)
Non-farm Payroll Report (US) (13:30)

TRADING ANNOUNCEMENTS
Dunelm Group

INTERIM DIVIDEND PAYMENT DATE
Associated British Foods, Connect Group, Countryside Properties, Debenhams, Patisserie Holdings , Shaftesbury

QUARTERLY EX-DIVIDEND DATE
Marsh & Mclennan Cos Inc.

ANNUAL REPORT
Miton Global Opportunities

SPECIAL DIVIDEND PAYMENT DATE
Booker Group, Helios Underwriting

AGMS
Aveva Group, Value and Income Trust

FINAL DIVIDEND PAYMENT DATE

Balfour Beatty, BGEO Group, Billington Holdings, Booker Group, Camellia, Christie Group, Harvey Nash Group, Helios Underwriting, Judges Scientific, Learning Technologies Group , M&C Saatchi, Restaurant Group, Restore, S&U, Sainsbury (J), SIG, Sprue Aegis, Stobart Group Ltd.