Traders are expecting another busy week after a much stronger-than-expected non-farm payroll report on Friday stirred up US markets, reversing a trend of growing expectations for quicker Fed easing.
This week, US markets will focus heavily on the key CPI inflation data and the conclusion of the Fed meeting to determine whether the hoped-for ‘soft landing’ is likely and if stocks can continue to rise. Several other tier 1 data releases and the Bank of Japan meeting are also expected to contribute to market volatility in the coming days.
Here is our usual day-by-day breakdown of the major risk events this week:
It looks like a quiet start to the trading week, with both Australian and Chinese markets enjoying a long weekend. There is little on the calendar for the rest of the day, so traders expect relatively smooth trading conditions.
Tuesday is also expected to be relatively calm before the event calendar picks up later in the week. There is little activity in the Asian session, but the focus will be on the UK once Europe opens with the release of employment data in London. The US session will see bond traders paying close attention to the latest 10-year bond auction, but apart from that, it is relatively quiet.
The calendar becomes busy on Wednesday with numerous updates across the trading sessions. The Asian session will focus on China with the release of CPI and PPI numbers midway through the day. The UK will be front and center in the European session with the release of the monthly GDP update. However, the big moves should come once New York opens. Initially, the focus will be on the monthly CPI update before attention shifts to the much-anticipated Fed meeting conclusion later in the session.
Investor focus will initially be on the Australian market with the release of employment data early in the day. The European session is expected to be quiet, but more inflation numbers are due out in the US once New York opens, this time in the form of PPI data. The weekly unemployment claims numbers are also scheduled, along with an update from Treasury Secretary Janet Yellen later in the day.
Japanese markets will be in focus once they open on Friday, with the Bank of Japan rate call and associated updates due around lunchtime in Tokyo. There is little on the calendar in the London session, but the University of Michigan data reports are due out when New York opens, and we are set to hear from ECB President Christine Lagarde later in the day.
