It looks like another volatile trading week ahead for markets, with geopolitics, data, and central banks playing significant roles in market movements. While there is less tier-1 data from the US this week, we do have some notable inflation figures from other regions.
The highlight of the week will likely be the European Central Bank’s rate decision on Thursday. However, there is potential for larger market moves on Monday after China failed to impress with a fresh stimulus update over the weekend, and inflation figures from the world’s second-largest economy fell below expectations.
Here is our usual day-by-day breakdown of the major risk events this week:
It could be a volatile start to the trading week in Asia after both inflation data and a stimulus update from China have disappointed traders. Liquidity may be an issue throughout all trading sessions as key centres, including Japan, the US, and Canada, are on holiday. There is little else on the calendar to influence market movements, although we do hear from some key FOMC members later in the day.
The macroeconomic calendar picks up in terms of events on Tuesday, although we must wait until the London open for the first tier-1 release. The focus will be on the UK economy, with key employment data due early in the session. The first inflation figure of the week is expected once the US session begins, as Canada releases its CPI data at the same time as the US Empire State Manufacturing Index.
Early attention in the Asian session will be on the New Zealand market, with key quarterly CPI figures due. A downside surprise could increase pressure on the RBNZ to implement further rate cuts. The UK CPI numbers will be released at the London open, likely driving further moves in sterling, with PPI data released simultaneously. However, the CPI figure is expected to dominate sentiment. There is little on the New York session calendar, though ECB President Christine Lagarde is scheduled to speak later in the day, garnering attention just ahead of the key rate announcement.
The focus during the Asian session will shift to Australian markets, with key employment data due early in the Sydney day. There will then be a long wait until midway through the London session, which sees the probable highlight of the week: the European Central Bank’s latest rate decision, with traders expecting a 25-bps cut. This will be followed swiftly by the main US data of the week, including Retail Sales and unemployment claims figures, before attention returns to the ECB for its press conference. Crude Oil Inventory data from the US is also due later in the session.
The final trading day of the week looks set to be quieter in calendar terms, though a few events could still move markets. The focus in Asia will once again be on China, with a key data dump expected midway through the day, including GDP, Industrial Production, and Retail Sales figures. The UK will also be in focus at the London open, with Retail Sales data due. The New York session appears relatively quieter, with only Building Permits data and the Treasury Currency Report scheduled.
