Markets stayed busy last week amid hawkish Fed signals following stronger PCE inflation data and Jackson Hole commentary. Attention now shifts to the labour market, with Friday’s US Non-Farm Payrolls the week’s main event. Traders will also watch Bank of Canada and RBNZ rate decisions, alongside a busy calendar of inflation and employment data across major economies, with geopolitics remaining a key wildcard.
Market Review & Outlook
It was another busy week for financial markets despite the northern hemisphere holiday season, with economic data, central bank commentary and geopolitical developments all combining to keep traders on their toes.
US inflation was a key focus last week, with markets turning increasingly hawkish on the Fed following a stronger-than-expected PCE reading and more hawkish commentary from Fed Chair Kevin Warsh. The focus now shifts towards the other side of the Fed’s dual mandate, with the US employment market firmly in the spotlight this week and the latest Non-Farm Payrolls report due on Friday.
Alongside the US jobs data, traders will also be watching two major central bank decisions from the Bank of Canada and Reserve Bank of New Zealand, while a busy run of economic releases across the major economies should provide plenty of opportunities for volatility. As has become the norm, geopolitical developments will also remain a key wildcard for markets throughout the week.
Key Events This Week
The key events worth watching this week include US Employment Data, the Bank of Canada Interest Rate Decision and the Reserve Bank of New Zealand Interest Rate Decision, alongside a fuller calendar spanning Germany, the Eurozone, Australia, Switzerland and the US.
| Date | Event | Market Focus |
|---|---|---|
| Monday | German Preliminary CPI | EUR |
| Tuesday | Eurozone CPI | EUR |
| Tuesday | US ISM Manufacturing PMI | USD |
| Tuesday | US JOLTS Job Openings | USD |
| Wednesday | Australian GDP | AUD |
| Wednesday | RBNZ Interest Rate Decision | NZD |
| Wednesday | US ADP Non-Farm Employment | USD |
| Wednesday | Bank of Canada Interest Rate Decision | CAD |
| Thursday | Swiss CPI | CHF |
| Thursday | US Weekly Unemployment Claims | USD |
| Thursday | US ISM Services PMI | USD |
| Friday | US Non-Farm Payrolls, Unemployment Rate & Wage Growth | USD |
| Friday | Canadian Employment Data | CAD |
Week Ahead Outlook
Monday – The economic calendar is relatively quiet to start the week, although markets could still see plenty of movement as traders digest the latest comments and developments from the Fed’s Jackson Hole symposium over the weekend. Any fresh geopolitical headlines could also set the tone early in the week, while UK markets will be closed for a bank holiday, potentially reducing liquidity through the European session. German Preliminary CPI will be the main data release, with the number likely to provide some direction for the Euro.
Tuesday – The Asian session remains relatively quiet on Tuesday, before attention turns towards European inflation with the latest Eurozone CPI numbers due during the London session. The US session will see the data flow ramp up, with ISM Manufacturing and JOLTS Job Openings both scheduled for release. The labour market data will be particularly important given the increased focus on the Fed’s next move and the upcoming Non-Farm Payrolls report.
Wednesday – The focus shifts towards the antipodean currencies on Wednesday, with Australian GDP data due during the Asian session ahead of the Reserve Bank of New Zealand’s latest interest rate decision. The European session looks relatively light, although activity should pick up again in New York with the release of the ADP Non-Farm Employment numbers. The Bank of Canada will then take centre stage with its latest interest rate decision, potentially providing plenty of volatility for the Canadian Dollar.
Thursday – Thursday’s Asian session is again relatively quiet from a major data perspective, while the European session will see traders turn their attention towards Switzerland with the latest CPI numbers. The Swiss Franc could see increased volatility around the inflation release, particularly given the focus on global central bank policy. The US session will then see the release of the weekly Unemployment Claims figures followed by the ISM Services PMI. Both numbers will be closely watched for further clues on the health of the US economy ahead of Friday’s main event.
Friday – Non-Farm Payrolls Day takes centre stage on Friday, with the latest US employment figures expected to dominate market moves heading into the weekend. The economic calendar is relatively quiet across the Asian and European sessions, which could see markets consolidate ahead of the New York open and the key employment release. The headline payrolls figure, unemployment rate and wage growth data will all be closely watched as traders assess the outlook for Fed policy. Canadian employment numbers are also due at around the same time, although the US report is likely to remain the main driver of market direction. With markets already turning more hawkish on the Fed following last week’s inflation data and Jackson Hole commentary, a strong employment report could provide further support for the US Dollar and Treasury yields, while a weaker-than-expected number could quickly see expectations shift back towards a more dovish Fed. Either way, Friday’s jobs report looks set to provide the week’s main volatility event.