Markets stayed volatile last week as US jobs data culminated in a stellar Friday report, keeping Fed rate expectations swinging almost daily. This week looks set to be a “game of two halves” — quiet early on before the ECB rate decision and US CPI data headline a busy finish. UK GDP is also in focus, while Middle East tensions remain a key wildcard for sentiment.
Market Review & Outlook
It was another busy week for traders last week, with markets remaining volatile as a combination of geopolitical headlines and fundamental data drove some big swings in sentiment.
The US economy remained firmly in focus, with a barrage of jobs numbers released throughout the week, culminating in a stellar jobs report on Friday. Fed rate expectations continue to swing almost daily, with markets following closely behind as we head towards what could now be one of the most important Fed meetings of the last couple of years.
This week looks set to be a “game of two halves” from an economic calendar perspective. The first few days are relatively quiet, but things ramp up significantly towards the end of the week, with the ECB rate decision and key US inflation numbers both due.
As always, however, the economic calendar is only one half of the story. Geopolitics is again likely to play a major role in market direction this week. The situation in the Middle East appears to be deteriorating further, and unless there is a meaningful turnaround in negotiations, traders will be watching closely for signs that the conflict could weigh further on risk sentiment as the week progresses.
Key Events This Week
The key events worth watching this week include US CPI Data, the European Central Bank Interest Rate Decision and UK GDP Data, alongside a fuller calendar spanning China and the US.
| Date | Event | Market Focus |
|---|---|---|
| Wednesday | Chinese CPI | CNY |
| Wednesday | Chinese PPI | CNY |
| Thursday | ECB Interest Rate Decision | EUR |
| Thursday | US PPI | USD |
| Thursday | US Weekly Unemployment Claims | USD |
| Friday | UK GDP | GBP |
| Friday | US CPI | USD |
| Friday | US Prelim. UoM Consumer Sentiment | USD |
| Friday | US Prelim. Inflation Expectations | USD |
Week Ahead Outlook
Monday – It is a quiet start to the week from a scheduled data perspective, with little of note due across the three trading sessions. That said, weekend geopolitical developments could provide plenty of volatility from the outset, while holidays in both the US and Canada during the final trading session are likely to keep liquidity on the lighter side.
Tuesday – Tuesday brings another relatively quiet calendar, with nothing significant scheduled across the trading day. US and Canadian markets will reopen, however, which should bring increased liquidity and flow into the final trading session.
Wednesday – Chinese markets come into focus during the Asian session on Wednesday, with key CPI and PPI numbers due midway through the session. Beyond the Chinese data, it is another relatively quiet day for the economic calendar, leaving geopolitics as the likely catalyst for any significant moves.
Thursday – The calendar finally starts to pick up on Thursday, with the final two sessions of the week shaping up to be considerably busier. The European Central Bank delivers its latest interest rate decision midway through the London session, before key US data takes centre stage shortly after the New York open with PPI and Weekly Unemployment Claims figures due.
Friday – Friday has the potential to be the busiest day of the week, with a heavy run of data scheduled across the final two trading sessions. The UK takes centre stage early in the London session, with a major data release headlined by the latest GDP numbers. However, the biggest risk event of the week is likely to come shortly after the New York open when the latest US CPI numbers are released. Preliminary University of Michigan Consumer Sentiment and Inflation Expectations figures are due later in the session, but with Fed expectations continuing to shift so aggressively, it is the inflation data that is likely to dominate market attention.