US employment data on Friday came in much closer to expectations than some investors had feared, prompting markets to pull back due to increased expectations for a more modest 25-basis point rate cut. This sets the stage for another intriguing week for traders and investors, with major US inflation data due, potentially providing the final piece of the puzzle for the Federal Reserve before its rate decision next week. In addition to this, other major data releases and central bank updates from key economies are on the horizon.
The US CPI update will be a major focus for many, though the European Central Bank’s (ECB) rate decision and significant UK data releases, including GDP and employment figures, will also play a central role in market movements.
Here’s our day-by-day breakdown of the major risk events this week:
The early focus of the day will be in the Asian session with the release of Chinese CPI and PPI data. Given the recent downturn in data from the world’s second-largest economy, traders are expecting significant market movements following the release. The remaining trading sessions for the day feature only minor data releases, with investors likely to see fresh trends emerging in response to Friday’s US numbers and the Chinese update.
The Asian session offers little in the way of fresh updates, but Sterling traders will be on high alert early in the London session as the latest UK employment figures are released. During the US session, Bank of Canada Governor Tiff Macklem is scheduled to speak from London, followed by an update from the Federal Reserve’s Michael Barr.
Wednesday is shaping up to be one of the most significant days of the week for markets. While the Asian session is again expected to be relatively quiet, attention will shift to the UK with the release of the latest GDP data after London opens. The focus will then move to the US, where key CPI data is due early in the New York session. While Crude Oil inventory data will also be released as usual, the impact of the CPI numbers is likely to dominate market flows.
Another busy day is predicted, with the Asian session again quiet in terms of major updates. However, once Europe opens, things will pick up. The ECB is expected to cut rates again, and traders anticipate considerable volatility in the Euro around this event. Later in the day, US PPI data is scheduled, likely to cause further market moves, followed by the ECB press conference, which will provide the final word on Europe’s economic outlook for the day.
Friday is expected to be quieter than the previous two days, with little on the calendar to move markets during the Asian or European sessions. The US session will see the release of the Preliminary University of Michigan Consumer Sentiment and Inflation Expectations data. Additionally, traders will be keeping an eye on news over the weekend, as China is set to release key Industrial Production and Retail Sales figures.
