The week will focus on key economic data and political events, including eurozone inflation figures, US jobs data and the UK general election.
Financial markets will focus on several key economic data that could shape market trends for the week. The euro zone is set to release its inflation estimate for June, as global central bank leaders prepare to speak at the ECB Forum. Additionally, the United States is expected to release key employment data, which will provide insight into the Fed’s interest rate path. The UK general election will also be in focus.
L’Europe
Germany will release its preliminary CPI for June. The country’s annual inflation rose to 2.4% in May, its highest level in five months. Service costs were the main driver of the price increase. Consensus forecasts predict that inflation in Germany could remain stable, rising 0.2% month-on-month in June.
Most importantly, Eurostat is to publish the initial estimate of inflation data for the Eurozone, based on energy prices and preliminary Consumer Price Index (CPI) reports from 13 member states of the euro zone. Annual inflation rose to 2.6% in May from 2.4% in April, the highest level in three months. The rise in energy prices was the main factor in this increase. Early releases from the major euro zone economies indicate that inflation could be slightly lower in June, with consensus suggesting that consumer prices will rise by 2.5% and that core inflation, excluding food and energy, will decrease to 2.8% against 2.9% the previous month.
Additionally, European Central Bank (ECB) President Christine Lagarde will speak at the ECB Forum on Wednesday, providing guidance on the path of interest rates and the central bank’s economic outlook.
Elsewhere, the UK general election vote will take place on Thursday, July 4. According to the latest Politico poll, the centre-left Labour Party is leading with 42% support, while the current centre-right Conservative Party is well behind with 20%, followed by the right-wing populist Reform Party with 18%. %. The Conservatives’ fall to an all-time low and the surge in support for the reformers mirrors the results of the European elections, highlighting public discontent with the rising cost of living.
United States
The trading week will be shortened on Wall Street due to the Independence Day holiday. In the United States, the main focus will be on the labor market and the minutes of the FOMC meeting. Fed Chairman Jerome Powell will also speak at the ECB Forum, which will be a key event for global markets.
On Wednesday, JOLTS job opening data for May will provide a leading indicator of the overall health of the U.S. job market. Job openings fell to just over 8 million in April, the lowest level since February 2021, suggesting a cooling in the country’s job market. This data will be followed on Friday by the nonfarm payrolls report for June, providing further information on employment conditions.
Minutes from the FOMC meeting will also be released on Wednesday, providing guidance on the Fed’s interest rate path. The central bank kept the interest rate unchanged in a range of 5.25% to 5.5% at its June meeting and forecast that there would be only one rate cut this year, instead of the three reductions planned at the previous meeting in March.
The United States added 272,000 jobs in May, up from 165,000 in April, but the unemployment rate rose to 4% for the first time since January 2022. Despite these signs of weakening, the country’s job market remains tense, which could further delay the Fed’s decision to cut rates. Consensus forecasts expect the creation of 189,000 new jobs and an unemployment rate maintained at 4%.
Asia Pacific
In Asia, the focus will be on Reserve Bank of Australia (RBA) meeting minutes, Australian retail sales, Japan’s Tankan manufacturing and non-manufacturing PMIs and China’s Caixin services PMI.
The RBA meeting minutes may be the most important event as the RBA is likely to raise interest rates again at its next meeting in August due to a resurgence in inflation in the country. The spot futures market indicates a 45% chance that the bank will raise interest rates from 4.35% to 4.6%. However, retail sales figures have shown signs of slowing due to high interest rates and rising living costs.
