Monday, July 1
Markets are bracing for a reaction to the election results in France, a significant political event that has the potential to ripple across the financial world. The currency market will be particularly sensitive, especially the EUR/USD pair, which has shown notable volatility in response to the announcement of early elections. Investors and analysts will be closely monitoring any shifts in this currency pair as it can serve as an indicator of broader market sentiment. Additionally, stock markets will need to reevaluate their positions and strategies to account for a new political landscape in Europe. This increased political instability could lead to a period of heightened uncertainty, making it crucial for market participants to stay informed and adaptable.
The start of a new month brings with it "PMI day," a key event where final manufacturing data is released for major economies. These Purchasing Managers' Index (PMI) reports provide valuable insights into the health and direction of the manufacturing sector. Typically, the final data doesn't differ much from the preliminary reports released earlier, but any slight deviations can still impact market movements. Investors will be keenly watching these numbers, especially for economies like Australia, Japan, China, Sweden, Spain, the Czech Republic, Switzerland, Italy, France, Germany, the Eurozone, Norway, the United Kingdom, and the USA. Each of these reports will help paint a more comprehensive picture of the global economic landscape.
One of the significant highlights in the macroeconomic calendar for today is the release of Germany's inflation statistics, including both the Consumer Price Index (CPI) and the Harmonized Index of Consumer Prices (HICP). These figures are crucial as they reflect the price changes experienced by consumers and are indicative of overall economic stability. Meanwhile, in the United States, the June ISM report for the manufacturing sector will be published. This report is closely watched as it provides a snapshot of the manufacturing activity, including new orders, production, employment, and supplier deliveries. It serves as a vital indicator of the overall economic health and can influence investor sentiment.
In Canada, a full-day holiday will mean a break for the Canadian markets, potentially leading to lighter trading volumes in North American markets. Meanwhile, in Sintra, Portugal, the European Central Bank (ECB) will kick off its annual conference for central bankers. This event, running until July 3, is a significant gathering where key policymakers discuss crucial economic and monetary issues. This year's theme, "Monetary Policy in an Era of Transformation," suggests a focus on how central banks are adapting to new economic challenges and technological advancements. The discussions and speeches at this conference will be closely followed by market participants for any hints on future monetary policy directions.
Tuesday, July 2
Today's economic calendar features the release of the HICP inflation reading and the unemployment rate for the Eurozone. These figures are essential indicators of economic health and will be scrutinized by investors and policymakers alike. Additionally, the Canadian PMI for the manufacturing sector will be released, providing insights into the state of the manufacturing industry in Canada. In the United States, the JOLTS (Job Openings and Labor Turnover Survey) report will be published, offering valuable data on the number of job vacancies. This report is crucial for understanding labor market dynamics and can influence economic policy decisions.
At the ECB conference in Sintra, high-profile speakers, including ECB President Christine Lagarde and Federal Reserve Chairman Jerome Powell, will take the stage. Their joint panel discussion, scheduled for 2:30 PM (London time), is highly anticipated. These two influential figures will discuss their perspectives on monetary policy, economic challenges, and potential solutions. Markets will be particularly attentive to any comments that might hint at future policy moves, as both the ECB and the Federal Reserve play pivotal roles in shaping global monetary policy.
Wednesday, July 3
Economists will begin their day with a comprehensive set of "services" PMI reports from various countries, including Australia, China, India, Spain, Italy, France, Germany, the Eurozone, the United Kingdom, and the USA. These reports are critical for gauging the performance of the services sector, which constitutes a significant portion of most economies. The data will provide insights into business activity, new orders, employment, and prices, helping to shape market expectations and economic forecasts.
In addition to the PMI reports, Eurostat will release the May inflation statistics for the Producer Price Index (PPI) in EU countries. The PPI measures the average changes in prices received by domestic producers for their output and is a leading indicator of consumer price inflation. Higher PPI figures can indicate rising inflationary pressures, which could influence monetary policy decisions.
From the macroeconomic calendar, there will also be the release of Turkey's inflation reading, the ISM employment and prices paid index for services, and May trade data for the USA. These releases will provide a comprehensive view of economic conditions in these regions and sectors, offering valuable insights for investors and policymakers.
Additionally, the Federal Reserve's minutes from the June meeting will be published. These minutes provide detailed insights into the discussions and deliberations that took place during the meeting, offering clues about the future direction of monetary policy. The Swedish Riksbank will also release its meeting minutes, providing additional context for its recent policy decisions.
Due to the Independence Day holiday on Thursday, the weekly number of jobless claims in the USA will be released a day early, on Wednesday. This report, along with the ADP employment report, will be crucial for setting expectations ahead of Friday's data from the Bureau of Labor Statistics. These labor market reports are closely watched as they provide a snapshot of employment conditions and can influence economic policy decisions.
Given the Independence Day holiday on Thursday, Monday's session on Wall Street was shortened, closing at 6:00 PM London time. This early close may have resulted in lighter trading volumes and potentially increased volatility as traders adjusted their positions ahead of the holiday.
Thursday, July 4
Independence Day in the USA typically signals a quiet day on financial markets, with many traders and investors taking the day off. However, this year promises to be an exception, with several significant events scheduled. One of the main events is the parliamentary elections in the United Kingdom. These elections are expected to be closely contested, with predictions of a potential defeat for the ruling Conservatives. The outcome of these elections could have significant implications for the UK's political landscape and economic policies.
In the morning, June inflation statistics from Switzerland will be released. These figures are particularly noteworthy as the Swiss central bank recently cut interest rates in response to economic challenges. The inflation data will provide insights into the effectiveness of these measures and the overall health of the Swiss economy.
Additionally, data on orders in the German manufacturing sector will be published. The German manufacturing sector has been facing challenges, with recent reports showing negative annual dynamics. The latest data will be closely watched for signs of improvement or further decline, providing important context for the overall economic outlook in Germany and the broader Eurozone.
The ECB will also release the minutes from the meeting where it lowered interest rates in the Eurozone. These minutes will provide detailed insights into the discussions and considerations that led to the decision, offering valuable clues about the ECB's future policy direction.
Friday, July 5
The morning will be dominated by industrial production data from several European countries, with particular attention to Germany. Germany's industrial sector is a critical component of its economy, and the latest production data will provide insights into its performance and prospects. Investors will be keenly watching for any signs of recovery or continued weakness.
Additionally, retail sales data for the Eurozone will be released, offering insights into consumer spending patterns and economic activity. The trade balances from several European countries will also be published, providing a comprehensive view of international trade dynamics.
In the United States, markets will resume trading after the Independence Day holiday. The highlight of Friday's agenda will be the US labor market data, which is closely watched due to its significance for interest rate decisions. This data will provide a snapshot of employment conditions, including non-farm payrolls, the unemployment rate, and average hourly earnings. These figures are critical for assessing the health of the US economy and shaping expectations for future monetary policy moves.
Romania will be making a decision on interest rates. Economists believe that the central bank may start easing monetary policy, potentially lowering rates for the first time since January 2023. A 25 basis point cut is expected, reflecting efforts to support economic growth amid challenging conditions. This decision will be closely watched for its implications on the Romanian economy and its potential impact on broader regional trends.
And that's all for this weekly market outlook. Have a nice Saturday!
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29.06.2024
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