The week ahead features a focus on Flash PMIs and inflation data across multiple countries.
On Monday, Eurozone, UK, and US PMIs will be released, which may influence interest rate expectations. The Eurozone Manufacturing PMI is expected to rise to 48.2 from 47.6, while the US Manufacturing PMI is forecasted at 51.8, down from 52.7.
Tuesday brings the US Consumer Confidence report, expected to fall to 94.0 from 98.3. This decline marks the largest drop since August 2021, influenced by rising inflation expectations.
Midweek Inflation Reports
On Wednesday, Australia’s Monthly CPI is expected to remain at 2.5%. The UK CPI is projected at 2.9%, while Core CPI may decrease to 3.6%. The Bank of England’s recent decision keeps interest rates steady as inflation remains a priority.
Thursday’s US Jobless Claims are anticipated at 225,000, up from 223,000. Continuing Claims are expected at 1,896,000, an increase from 1,892,000, indicating ongoing labour market pressures.
Friday’s reports include the Tokyo Core CPI expected at 2.2% and US PCE expected at 2.5%. Market predictions remain stable unless deviations occur in these anticipated figures.
The upcoming days will be shaped by data releases that can shift expectations for interest rates and inflation trends. Traders should keep a close watch on economic figures, as they will dictate short-term positioning.
Early in the week, purchasing managers’ indexes will give insight into business conditions in major economies. Expectations suggest that manufacturing activity in the Eurozone could show minor improvement, while the US figure may reflect a slight slowdown. If the US data comes in lower than projected, it could weigh on the dollar, potentially influencing equity and bond markets. Meanwhile, strength in Europe’s figures might provide some support to the euro, but only if the increase suggests a stronger recovery rather than a temporary bounce.
As the week progresses, consumer confidence in the US will be a focal point. A projected dip would mark the most pronounced decline since mid-2021, underscoring rising concerns about purchasing power. A weaker reading could fuel expectations for rate adjustments later in the year, reinforcing discussions around loosening financial conditions. If confidence deteriorates more than forecasted, we may see a shift away from riskier assets in the short term.
Midweek, inflation data will offer a view of price pressures across regions. Australia’s inflation holding steady at 2.5% is likely to confirm existing projections, barring any unexpected details in the data breakdown. In the UK, the annual inflation rate is expected to remain just below 3%, while core inflation could show slight easing. These figures will be pivotal for gauging the Bank of England’s next move. Should core prices come in below expectations, it may open the door for speculation around rate cuts later in the year. However, if pricing pressures persist, policymakers could be forced to maintain their cautious stance for longer.
By Thursday, US jobless claims will provide a measure of labour market resilience. A small uptick in both initial and continuing claims suggests some softening but does not yet signal a broader slowdown. If claims rise more than anticipated, concerns about employment conditions could resurface, influencing expectations for the Federal Reserve’s policy path.
End Of Week Inflation Data
Closing out the week, inflation data from Japan and the US will be key. Tokyo’s core inflation is projected to hold steady, reinforcing expectations that the Bank of Japan will proceed with caution in making monetary adjustments. Meanwhile, the US PCE deflator, a preferred inflation gauge for policymakers, is forecasted to remain at 2.5%. Any deviation from this figure has the potential to steer market sentiment, particularly regarding expectations for interest rate movements in the second half of the year.
