It was an interesting trading week for financial markets last week, with the major update coming in the final session as Fed Chair Jerome Powell all but confirmed a September rate cut in his speech from Jackson Hole.
Markets closed the week in a positive fashion on Friday, and most investors are expecting that momentum to carry into the early sessions of this week.
It is a relatively quiet week on the macroeconomic calendar; however, there are a few key updates that should see some volatility around them, culminating in the Fed’s favoured inflation indicator on Friday.
Here is our usual day-by-day breakdown of the major risk events this week:
It could be an interesting start to the week for financial markets as key central bank heavy hitters are still in Jackson Hole for the symposium over the weekend, and we could see some sharp moves on the open in Asia, especially in currency markets. Kiwi markets will then be in focus early in the day with the latest Retail Sales numbers due out. Liquidity will be lower than usual in the European session with the UK on holiday, and we could see some moves in the euro with the German IFO Business Climate data due out. The New York session is relatively light on data updates, with just the New Home Sales data due out.
The first two sessions of the day on Tuesday are light in terms of calendar events; however, things should heat up once New York opens. US Durable Goods data is due out early in the day, and this is followed a couple of hours later by the CB Consumer Confidence numbers and the Richmond Manufacturing Index data. The focus will move to Canadian markets later in the session with Bank of Canada Governor Tiff Macklem due to speak.
Australian markets will be in focus for traders in the Asian session with key CPI data due out early in the day. There is very little on the calendar in the latter two sessions; however, the weekly US Crude Oil Inventory numbers are due out in the New York session, and we do hear from the Fed’s Thomas Barkin later in the day.
There is nothing of note on the calendar in the Asian session on Thursday, but the focus will be on Swiss markets early in the London session with the quarterly GDP numbers due out. The New York session again looks likely to be the busiest, with US quarterly Prelim GDP data due out alongside the weekly Unemployment Claims numbers early in the day. Pending Home Sales data is due out later, and we also hear from the FOMC’s Christopher Waller just after the close.
Inflation numbers are in focus across the sessions on Friday. The focus in the Asian day will be on Japanese markets with the key Tokyo CPI numbers due out. The London session sees Prelim CPI data out from Germany, France, Italy, and Spain. However, the main event of the day—and probably the week—is once again scheduled for the final session. The US Core PCE Price Index data is due out early in the session, and traders will be looking for this to confirm a September rate cut. Canadian GDP numbers are out at the same time, and we have revised University of Michigan data later in the session, but expect the PCE numbers to dominate sentiment into the weekend.
