Below are the most important global events likely to affect FX and bond markets in the week starting Aug. 12.
Data on U.S. inflation and other U.S. economic indicators will be scrutinized after recent weak jobs data sparked fears of a possible recession.
In Europe, a raft of U.K. data are due, including inflation figures, as well as a rate decision in Norway.
In Asia, a decision from New Zealand's central bank and economic growth estimates for Japan are in focus, with a stream of data out of China also set to command attention.
U.S.
U.S. data in the coming week, including inflation and retail sales, will be particularly sharply scrutinized given heightened speculation that the Federal Reserve could need to cut interest rates by much more than previously expected.
Weak U.S. jobs data at the start of August caused panic moves on financial markets recently, including sharp falls in U.S. Treasury yields and in the dollar, amid growing recession fears.
These moves have partially been reversed since, with some analysts attributing them to low summer liquidity. Still, money markets are currently pricing in around 100 basis points of Federal Reserve interest-rate cuts for this year, implying a large reduction of 50 basis points for at least one of the three remaining rate-setting meetings this year.
"We do not think that the current economic data justifies such an aggressive pace of easing over the remaining three meetings," Investec economists said in a note.
They forecast only two 25 basis-point cuts in September and December, but said the coming week's data could be crucial for settling rate expectations.
U.S. CPI inflation data for July on Wednesday and retail sales figures on Thursday will be the highlight, while producer price data for July on Tuesday will give an indication of pipeline inflationary pressures.
"Last month's [CPI] report saw an encouraging step down in shelter cost pressures, which if sustained will be helpful in returning inflation back to the 2.0% target," Investec's economists said.
Friday's University of Michigan consumer sentiment survey for August will provide a more up-to-date snapshot of the current health of the U.S. economy.
Other data include U.S. industrial production for July on Thursday and July housing starts on Friday.
The Treasury will offer $70 billion in 26-week Treasury bills on Monday and $75 billion in 42-day bills on Tuesday.
EUROZONE
The first estimate of eurozone second-quarter gross domestic product is due on Wednesday, alongside industrial production figures for June, and will be watched amid recent evidence that the eurozone's recent economic recovery could be stuttering.
Recent weak purchasing managers' surveys on eurozone manufacturing and services activity "point to downside risks in the eurozone economy as new orders continue to tumble," said Melanie Debono at Pantheon Macroeconomics in a note.
Market volatility and worrying weakness in the U.S. economy present fresh risks to activity this month, Debono said.
The German ZEW sentiment survey for August, due on Tuesday, will provide the latest snapshot of the health of the eurozone's largest economy. Eurozone trade data for June is due on Friday.
Some European countries have a public holiday on Thursday.
U.K.
The coming week is a key one for U.K. data and comes after the Bank of England began the month with its first interest-rate cut in four years, although the accompanying statement suggested policymakers could be wary of reducing rates too fast given continued high levels of services and wage inflation.
Consumer-price inflation data for July on Wednesday will take center-stage given the implications for interest rates. Annual CPI has stayed at the BOE's 2.0% target for the last two months but is now expected to edge higher due to base effects. Investors will be watching particularly to see whether services and core inflation drop, while wage inflation will be watched when U.K. jobs data is released on Tuesday.
Further data will provide glimpse of the health of the U.K. economy, including the first estimate of second-quarter gross domestic product, industrial production and trade figures for June on Thursday, and retail sales on Friday. Producer-price inflation for July will be released alongside CPI data on Wednesday.
"We judge that moderating underlying inflation pressures, slacker labor market conditions and some slowdown in the pace of GDP growth over the second half of this year will combine to persuade the [BOE's monetary policy] committee to lower the Bank rate by further 25 basis points to 4.75% in November," said Investec economist Philip Shaw in a note.
A reduction at the next meeting in September is unlikely unless there is a resumption of the recent market volatility, he said.
The U.K. Debt Management Office plans to sell a January 2038 gilt on Tuesday.
SCANDINAVIA
Norway announces a rate decision on Thursday, where it is widely expected to leave interest rates on hold, with a first rate cut not expected until December, particularly given recent weakness in the Norwegian krone which could push up inflation.
"They [Norges Bank policymakers] are in no urgency to start the cutting cycle and the volatile environment is likely to keep them prudent," BofA analysts said in a note.
By contrast, Sweden's Riksbank is expected to cut interest rates much faster. Swedish inflation data for July is released on Wednesday and is expected to show a further decline ahead of a rate decision the following week.
"[Swedish] inflation indicators continue to be subdued with pricing plans in the retail sector remaining subdued while plans in the service sector have edged lower," Citi analysts said in a note.
AUSTRALIA & NEW ZEALAND
The Reserve Bank of New Zealand's policy meeting on Wednesday will attract a lot of attention given widespread expectations that it will finally begin the process of cutting interest rates.
With the economy in and out of recession for close to two years and inflation in retreat, the RBNZ could deliver a 25-basis-point cut, lowering the official cash rate to 5.25%.
But some economists think the presence of elevated domestic inflation pressures might see the RBNZ remain sidelined until its next policy meeting.
Nic Guesnon, an economist at UBS, expects the decision will be a line-ball call for the New Zealand central bank.
In Australia, the release of July employment data on Thursday will be critical.
The Reserve Bank of Australia remains hawkish even as its global peers have moved toward cutting interest rates, and RBA Governor Michele Bullock has cited tightness in the labor market as a concern for the central bank.
Another strong month for employment creation in July will stoke expectations that the RBA could indeed raise interest rates again before it looks to cut next year.
JAPAN
Japan's second-quarter gross domestic product print on Thursday will be looked at for signs of economic strength that will help justify the central bank's decision to raise rates, and comes against a hectic backdrop of yen volatility and stock-market swings.
The Japanese economy likely grew an annualized 2.2% in the April-June quarter, according to a poll of economists by data provider Quick.
Given sharp yield and price swings in JGBs recently, market participants will probably closely monitor investor appetite for the Ministry of Finance's scheduled auction of 2.3 trillion yen in five-year sovereign notes on Wednesday and another auction of 10-year inflation-indexed bonds on Friday.
CHINA
On Thursday, a flurry of data releases gauge the strength in China's economy at the start of the second half of the year. Data for July, including house prices, industrial output, fixed asset investment, and retail sales will be looked at for evidence of the impact of policymakers' most recent efforts to revive economic growth.
Analysts widely expect the numbers to indicate that the economy lost some steam in July.
Economists at Barclays expect retail sales to have risen last month, but mostly due to base effects. "We think slumping home prices and challenging labor market conditions will continue to cap consumption," they said in a note.
Persistent housing-sector woes were likely also a factor in limiting investment growth, and the economists suspect that industrial production probably slowed, noting softer exports growth and weak PMI readings.
China's central bank could also announce the rate on its one-year medium-term lending facility, which is broadly expected to stay unchanged after a cut in July. Traders will be watching to see what further action the central bank might take to calm the rally in bond markets and put a floor under record-low yields.
While pressure on the yuan, which has constrained PBOC's ability to lower rates, has eased, concerns about bond yields, which have fallen to record lows, will probably prevent it from rushing into another cut, Capital Economics said.
Credit data might also be released, indicating whether appetite for borrowing is finally on the mend.
Bank loan growth probably stabilized in July, CE economists said, adding that broad credit growth likely partially reversed from June's record low, though signs suggest private sector demand is still depressed.
PHILIPPINES
The Philippines central bank makes its rate call in the wake of second-quarter growth data and a July inflation print that has analysts weighing if cuts are on the cards.
Barclays economists are confident that the central bank will ease this month, expecting last month's stronger-than-expected inflation to fade. Economists at Goldman Sachs think a cut will come in the fourth quarter, but see scope for an August move as forex pressures ease amid the prospect of more rate cuts by the Federal Reserve.
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08-09-24 1205ET
