Markets await important data releases this week, that may provide more clarity about major central banks’ rates decisions. Investors will also listen to Fed members’ speeches for clarity about their evaluation of the US economy, the level at which the Fed may slow down its pace in rate hiking, and whether they could go for 50pb or 75bp in September’s meeting.
Last week, the Fed chair said that the US central bank was likely to keep a restrictive policy for some time and stated clearly that it would be wrong to loosen policy prematurely. Powell blamed current inflation levels on high demand and low supply then hinted at an “unusually large” rate hike in September however, he did not mention any percentage as it would depend on the upcoming data (NFP and inflation reports of August).
The market’s risk appetite deteriorated on Friday on the Fed’s chair’s remarks leading the US major indices to close in the red while the US dollar rallied, and the gold price lost nearly 0.5% of its value.
Economic data highlights
Monday 29 of August
Tuesday 30 of August
- AUD - Retail Sales (JUL)
- JPY - Coincident Index Final (JUN)
- USD- Fed Brainard Speech
Wednesday 31 of August
- JPY- Unemployment Rate (JUL)
- EUR- Consumer Confidence Final (AUG)
- EUR- Inflation Rate (Germany- AUG)
- USD- Consumer Confidence (AUG)
- USD- Fed Barkin and Williams Speeches
Thursday 1st of September
- JPY-Industrial Production (JUL)
- JPY- Retail Sales (JUL)
- CNY- Manufacturing PMI (AUG)
- JPY- Consumer Confidence (AUG)
- EUR- Unemployment Rate (Germany- AUG)
- EUR- Inflation Rate Flash (AUG)
- USD- Fed Mester Speech
- CAD- GDP Growth Rate (Q2)
Friday 2nd of September
- USD- Fed Bostic Speech
- AUD- Global Manufacturing PMI Final (AUG)
- CHF- Inflation Rate (AUG)
- EUR- Unemployment Rate (JUL)
- EUR- Global Manufacturing PMI Final (AUG)
- CAD- Global Manufacturing PMI (AUG)
- USD- ISM Manufacturing PMI (AUG)
The Eurozone Data
- USD- Non-Farm Payrolls (AUG)
- USD- Unemployment Rate (AUG)
- USD- Factory Orders MoM (JUL)
Markets expect the eurozone’s inflation (AUG) and unemployment (JUL) prints this week. This data will be key in helping investors to predict the ECB’s next step in the September meeting.
It is worth mentioning that the energy crisis in Europe continues to affect the European economy negatively sending the CPI number even higher therefore, we could see the eurozone’s inflation figure rise from 7.9% in July to 8% while the unemployment number may stabilize at 6.6% increasing the odds of seeing the ECB hiking 50bp in the September meeting.
The US economy has added nearly 3.2 million jobs this year with over half-million in July despite having been in recession. It is unlikely to see July’s print again given vacancies have started to decrease.
That said, investors will keep an eye on this report to see if the actual number comes in line with expectations of 285k. Therefore, should the number come in line or higher than expected this will increase the likelihood of hiking 75bp rather than 50bp in the upcoming Fed meeting in September.
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