It looks like it’s going to be a much more action-filled week ahead for investors, with plenty of tier 1 data and central banker updates to keep traders on their toes. As expected, last week’s price action across most products was sporadic as holiday-affected markets and a thin macroeconomic calendar hit trading conditions. No new bad news translated into good news, and global stock markets continued to drive higher. However, a more active trading week ahead could cause more volatility.
Without a doubt, the key event ahead is the US CPI data, due out slap bang in the middle of the trading week. Last month’s higher-than-expected print pushed out Fed rate cut expectations and hit stocks heavily. Stock markets have recovered well, and rate cut expectations have been gradually pulled back in by other data results in the last couple of weeks, but a print higher than the expected 0.4% m/m increase or the y/y 3.4% print could push rate cuts firmly out of 2024.
Here is our usual day-by-day breakdown of the major risk events this week:
Asian markets are set to open on the front foot after another solid day on Wall Street on Friday. The calendar week kicks off with a key inflation data print out of New Zealand early in the session, which could see further volatility in the Kiwi. The European and US sessions look to be relatively quiet, although we are set to hear from the FOMC’s Jefferson and Mester, as well as the SNB’s Thomas Jordan, later in the day.
APAC markets have little on the agenda today, although Yen traders will keep a close eye on Japanese PPI data out early in Tokyo. The early focus for the European session will be on the UK, where key job data is due out in London. The big US data prints kick off today early in the New York session with the PPI and Core PPI numbers due out, and Fed Chair Jerome Powell is set to speak later in the day as well.
The focus in Asian markets will once again be on the antipodes, with Australian Wage Price Index data out early in the day. Once again, Europe has mainly lower-tier data scheduled, but the main event for the day, and indeed the week, comes swiftly after the New York open. The US CPI data will likely dominate the headlines and market moves for the rest of the session; however, Retail Sales and Empire State Manufacturing Index numbers are also due out at the same time and shouldn’t be discounted.
Asian markets could be lively as they pick up the aftermath of the CPI print but also have some key updates due during the session as well. Japanese Prelim GDP data is due out early in the day, and then key jobs numbers are out in Australia later in the morning. The European session sees the latest ECB Financial Stability Report released, but traders are once again expecting more volatility in the New York session as more US data is set to be released. Weekly unemployment claims numbers, Building Permits, and the Philly Fed Manufacturing Index all come out at the same time, and they are followed up later by the monthly Industrial Production data.
Traders are anticipating smoother conditions on Friday with only a couple of key data releases scheduled. Asian markets will be focused on China with the release of the latest Industrial Production numbers and Retail Sales data due out midway through the session. There is little scheduled to move the dial in the European day, and it’s a similar situation in the US Day, although there are a couple of Fed members, Waller and Kugler, set to speak in the afternoon, which could add a bit of spice to take us into the weekend.
