Top Economic Events to Watch Out For This Week: Impact on Global Markets

This week, several key economic events are scheduled to unfold that could significantly influence global markets. Here’s a rundown of the most noteworthy happenings and their potential impact:

Monday, August 23:

Bank of England Interest Rate Decision: The Bank of England will announce its decision on the interest rate at 12:00 PM BST. Analysts predict a rate hold, but any signs of a shift in monetary policy could cause volatility in the British pound.

Tuesday, August 24:

US Durable Goods Orders: This indicator of business investment is expected to rebound in July, following a disappointing June. A strong reading could boost investor confidence and lift US stocks.

Wednesday, August 25:

Eurozone Consumer Price Index (CPI): The CPI is anticipated to rise in August, possibly indicating inflationary pressures within the Eurozone. This could have implications for the European Central Bank’s monetary policy and the euro.

Thursday, August 26:

US Unemployment Claims: The weekly jobless claims data is a leading indicator of the labor market’s health. A significant deviation from expectations could impact both the US dollar and US stocks.

Friday, August 27:

Japanese Gross Domestic Product (GDP): Japan’s Q2 GDP reading is projected to show modest growth. A better-than-expected number could lead to a rally in the Japanese yen, while a weak result might weigh on it further.

Bonus:

US Personal Consumption Expenditures (PCE): This measure of consumer spending, which is the largest component of GDP, could provide valuable insights into the state of the US economy. A strong showing here could further bolster market sentiment and risk assets.

Week Ahead in Economics: Key Events and Their Impact on Global Markets

I. Introduction

Brief Overview of the Economic Calendar for the Upcoming Week

The economic calendar is a vital tool for investors and traders, providing important data releases that can significantly impact financial markets. In the upcoming week, several key economic events are scheduled that deserve close attention:

Monday:

• China: Caixin Manufacturing PMI
• Eurozone: Consumer Confidence
• United States: ISM Manufacturing PMI

Tuesday:

• Europe: German Ifo Business Climate
• United States: Construction Spending and ISM Services PMI

Wednesday:

• United Kingdom: Bank of England Rate Decision and Monetary Policy Statement
• Eurozone: CPI and Harmonized Index of Consumer Prices (HICP)
• United States: ADP Employment Report

Thursday:

• United States: Initial Jobless Claims and Productivity

Friday:

• United States: Non-Farm Payrolls and Unemployment Rate

Importance of Staying Informed About Key Economic Events and Their Impact on Global Markets

Staying informed about economic data releases is crucial for making informed investment decisions. These events can cause market volatility and may lead to significant price movements in currencies, stocks, bonds, and commodities. Understanding the potential impact of these events can help investors prepare their portfolios accordingly and capitalize on opportunities as they arise. Therefore, it is essential to closely monitor economic calendars and stay updated with the latest news and analysis from trusted financial sources.

Monday:

US Federal Reserve Bank of St. Louis President James Bullard Speech

On Monday, James Bullard, president of the US Federal Reserve Bank of St. Louis, is scheduled to deliver a speech. The topic of his speech is anticipated to include the economic outlook, interest rates, and inflation. Market participants will closely monitor Bullard’s remarks for any hints regarding the Federal Reserve’s future monetary policy stance. A more hawkish tone from Bullard could lead to potential shifts in interest rate expectations, causing noticeable movements in the US dollar and Treasury yields.

Eurozone Consumer Confidence Index (January)

Additionally on Monday, the Eurozone Consumer Confidence Index for January will be released. It is predicted to exhibit a slight increase from December’s figure. A surprising uptick in consumer sentiment could be an indicator of improving spending patterns within the Eurozone. This information may carry market impact, especially for European equity markets and the euro, as it could potentially signal a positive trend in economic conditions.

I Tuesday:

UK Gross Domestic Product (Q4 2022)

Expectations:: The UK‘s economy is anticipated to experience modest growth in the fourth quarter of 2022 compared to previous quarters. This growth is expected to be driven primarily by the services sector and consumer spending, with manufacturing and construction sectors continuing to recover gradually.

Market impact:

The release of the UK’s Gross Domestic Product (GDP) data for Q4 2022 will have significant implications for the Bank of England‘s monetary policy. If the growth figure falls short of expectations, it could reinforce concerns about the economy’s resilience and lead to further easing measures from the Bank. Conversely, a stronger-than-expected figure could bolster confidence in the economy’s ability to withstand external pressures and result in tighter monetary policy. The data will also influence the value of the British pound, with a weaker pound potentially making UK exports more competitive and attracting foreign investment. Additionally, market reaction to the GDP data could impact global markets, as the UK is a major player in the global economy.

US Durable Goods Orders (December)

Expectations:: In the US, durable goods orders are forecasted to decrease in December due to lower demand for transportation equipment. However, this decline is not expected to be as significant as the one seen in November, as other sectors such as machinery and computers are anticipated to show growth.

Market impact:

The release of the US durable goods orders data for December will provide insight into business investment and production trends in the world’s largest economy. A larger-than-expected decline could be a sign of weakness in the manufacturing sector, which could negatively impact industrial stocks and potentially lead to further easing measures from the Federal Reserve. Conversely, a stronger-than-expected figure could bolster confidence in the economy’s ability to withstand external pressures and lead to an increase in industrial stocks. Additionally, global markets may react to the data based on its implications for US inflation and interest rates.

Wednesday:

European Central Bank (ECB) President Christine Lagarde Speech

Expectations are high for ECB President Christine Lagarde’s speech on this Wednesday. She is anticipated to cover several topics including monetary policy, economic outlook, and inflation concerns. Investors will be closely watching for any updates on the ECB’s interest rates and bond-buying plans, which could potentially shift investor sentiment towards European assets. The market impact of Lagarde’s speech may be significant as any indication of a change in the ECB’s monetary stance could have far-reaching implications for the European economy and financial markets.

US New Home Sales (December)

Also on Wednesday, the US Census Bureau is scheduled to release data on new home sales for December. According to recent surveys of economists, there is an expectation for a modest increase in new home sales from the previous month. This data release is crucial as it provides insight into housing market conditions and consumer confidence, two essential factors for the overall health of the US economy. Additionally, any significant deviation from expectations could potentially impact homebuilders and related industries.

Economic Indicators: A Look at Unemployment Rates and Initial Jobless Claims (Week of February 7, 2023)

V.1. Thursday:

A.European Union (EU) Unemployment Rate (December)

Expectations: The EU unemployment rate for December is anticipated to slightly decline from the previous month’s figure.

Market Impact: A decrease in the EU unemployment rate reflects improving labor market conditions within the European Union. This improvement could lead to increased consumer spending, as employed individuals have more disposable income available for purchases. Furthermore, a lower unemployment rate may contribute to overall economic growth within the EU.

A.US Initial Jobless Claims (week ended February 4)

Expectations: It is projected that there will be a decrease in the number of new initial jobless claims from the previous week.

Market Impact: A decline in initial jobless claims is typically seen as a positive sign for the US labor market. Lower initial jobless claims indicate fewer layoffs and potentially stronger employment conditions. This improvement may bolster investor sentiment, as it suggests a healthier economy, which could lead to increased investment in equities. Conversely, an unexpected increase in initial jobless claims might negatively impact investor sentiment and potentially weaken the stock market.

Note:

It is important to remember that while these economic indicators are significant, they represent only a small portion of the broader economic picture. Market participants should also consider other factors, such as central bank policies, geopolitical events, and corporate earnings reports when making investment decisions.

VI. Fridays Economic Data:

Eurozone Inflation Rate (January)

On Friday, the European Statistical Office will release the Eurozone Inflation Rate data for January. It is widely expected that there will be a slight increase in comparison to the previous month. This anticipation arises due to continued energy price hikes and other cost pressures. However, if the actual figure exceeds expectations, it could signal more pronounced pricing trends in the Eurozone, leading to potential implications for interest rates, bond yields, and currency values. Conversely, a lower-than-expected figure may alleviate concerns about inflationary pressures and bolster the Euro.

US Consumer Price Index (January)

Later in the day, the US Consumer Price Index (CPI) data for January will be revealed. Economists are expecting a modest increase from the previous month due to persistent rising energy and food prices. This inflationary pressure is an essential factor in determining investor sentiment towards Treasury bonds. In case of a higher-than-anticipated increase, there could be a sell-off in US Treasuries as investors adjust their expectations for inflation and the Federal Reserve’s monetary policy response. Conversely, if the CPI data comes in lower than anticipated, it may help stabilize bond yields and provide a boost to the US dollar.

Conclusion:

In the coming week, several significant economic events are scheduled to unfold. Firstly, on Monday, the ISM Manufacturing PMI for May is due to be released, which may give insight into the health of the manufacturing sector.

Tuesday

brings the ADP Employment Report for May, providing an early estimate of private sector employment growth.

Wednesday

is highlighted by the FOMC Rate Decision, where the Federal Open Market Committee (FOMC) is expected to make an announcement regarding interest rates. Lastly, Friday will see the highly anticipated Non-Farm Payrolls Report for May.
The impact on markets can be substantial based on these expectations and historical trends. For instance, a positive Manufacturing PMI report could lead to rising stocks, while a disappointing FOMC decision might cause declines in bond yields. It is crucial for investors to stay informed and adjust their portfolios accordingly. Keep a close eye on these key economic indicators and prepare for potential market shifts.