By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting Feb. 2.
U.S. jobs data will come back into focus in the coming week as investors assess the likely timing of the next Federal Reserve interest-rate cut after President Trump announced Kevin Warsh as the next Chair once Jerome Powell's term ends in May.
Central bank decisions are due from the European Central Bank, the Bank of England and the Reserve Bank of Australia, with the RBA expected to raise interest rates as inflation rises strongly.
U.S.
Attention turns to key U.S. jobs data after a volatile week for the dollar that saw it drop to its lowest in four years against a basket of currencies before recovering.
Notably, monthly nonfarm payrolls data for January are due on Friday and will give clues on the health of the labor market and the likely consequences for monetary policy.
The Federal Reserve in its recent decision--where it kept interest rates on hold after three consecutive reductions--acknowledged that the labor market was beginning to stabilize. Any confirmation of that view could help the dollar, while a weaker number could reignite speculation about rate cuts.
"The market remains wary of what is happening in the jobs market and was unmoved by the Fed's positive spin, continuing to price two 25 basis-point rate cuts this year," ING economist James Knightley said in a note.
Ahead of that, further indications on the jobs market will come in the form of JOLTS job openings data for December on Tuesday, ADP private payrolls for January on Wednesday and weekly jobless claims Thursday.
Other key indicators on the health of the U.S. economy are due in the coming week, with the latest ISM survey on manufacturing activity in January due Monday, followed by the ISM's services survey on Wednesday. The University of Michigan's preliminary consumer survey for February is due Friday.
The U.S. Treasury's quarterly refunding announcement is due Wednesday.
Investors will also be digesting Trump's choice of Kevin Warsh as Fed Chair to replace Powell when his term ends. Warsh served on the Fed's board of governors from 2006 to 2011.
Canada
Canadian jobs data for January are due on Friday. These come after the Bank of Canada recently kept its policy rate unchanged and will be watched for a signal of where rates go from here.
"Canadian jobs numbers should post another increase in employment with a slight dip in unemployment, which should leave the market continuing to price stable rates through the rest of the year," ING's Knightley said.
Latin America
Mexico's central bank announces an interest-rate decision on Thursday.
Analysts at Citi expect interest rates will be left on hold at 7.00% at this meeting. However, a rate reduction is a possibility due to subdued growth and recent strength in the Mexican peso, they said.
Eurozone
The European Central Bank's meeting on Thursday is the week's key focus in eurozone markets. Rates are expected to be kept on hold with attention tuned to any guidance on the rate outlook and any comments on the euro's recent strength.
"Renewed geopolitical uncertainty and the strength of the euro point to a risk of a slight dovish tilt communications," analysts at BNP Paribas said in a note.
That said, the bar for any policy action is high, and stronger-than-anticipated underlying price pressures suggest the ECB will favor a steady hand for a prolonged period, the analysts said.
Bank of America analysts still expect the ECB to cut rates in March but their conviction is fading, they said in a note.
Data releases include final manufacturing PMIs on Monday and services PMIs on Wednesday for January from Spain, Italy, France, Germany and the eurozone.
Provisional inflation data for January are due from France on Tuesday, Italy and the eurozone on Wednesday. Germany will publish manufacturing orders data for December on Thursday, while France will release industrial production figures for the same month. German and Spanish industrial production data for December are due Friday.
Retail sales data for December will be released by Germany on Monday, and Italy and the eurozone on Thursday.
Germany will auction February 2035 green Bunds on Tuesday and November 2032 conventional Bunds on Wednesday. Spain and France will hold bond auctions on Thursday. The relatively low volume of scheduled issuance keeps the door open for syndicated issues.
U.K.
A rate decision by the Bank of England on Thursday will be the key event in the U.K. in the coming week. Interest rates are expected to be left on hold at 3.75% while the BOE will also announce its latest forecasts for growth and inflation.
In December, the BOE cut interest rates by 25 basis points, but only by a narrow 5-4 majority, as some members remain concerned that inflation is still well above target even as it has declined notably.
This time, policymakers should be less divided "as last month's move may well reduce most members' appetite for another move now," Investec economist Philip Shaw said in a note. Further ahead, rates are likely to fall, however, as inflation drops back, he said.
U.K. economic data in the coming week include Nationwide's house price survey for January and the final estimate of the January manufacturing PMI survey on Monday, followed by final PMI services data on Wednesday.
The U.K. plans to sell Oct. 2035 gilts on Tuesday.
Scandinavia
Denmark will hold a bond auction on Wednesday.
Poland
Poland's central bank announces a rate decision Wednesday.
Rates are likely to be left on hold at 4.0%, ING analyst Leszek Kasek said in a note.
Japan
All eyes are on Japan's Lower House election on Sunday, Feb. 8, which could give the prime minister a stronger mandate to implement economic policies.
Many economists expect the ruling Liberal Democratic Party to regain its majority thanks to Prime Minister Sanae Takaichi's popularity. But markets aren't as enthused by her policy proposals, fearing they could worsen the country's fiscal health. That has led to a selloff in Japanese government bonds and the yen, though prices have stabilized.
The outcome of the election, and any comments from officials about the yen, will be carefully scrutinized for signs on the direction of future policy.
On Monday, the Bank of Japan is scheduled to release a summary of opinions from its January meeting, at which it held its policy rate steady at a three-decade high of 0.75%. Economy watchers look to the summaries to get more insights into the central bank's thinking.
On Friday, investors will also look to any potential remarks from BOJ member Kazuyuki Masu, who is scheduled to meet with local leaders in Ehime, Japan.
The ministry of finance will auction about 2.6 trillion yen of 10-year JGBs on Tuesday and around 700 billion yen of 30-year sovereign securities on Thursday. The 30-year JGBs to be issued in February will be a reopening of the January 2026 issue.
Australia/New Zealand
Australia's central bank is widely expected to raise interest rates Tuesday, but markets are uncertain how aggressive the coming tightening cycle will be.
With inflation back above the RBA's 2% to 3% target band, policymakers will at least need to deliver a hike at the coming meeting, and lace it with hawkish remarks to ensure markets know it is serious about easing price pressures.
But the expected increase in the official cash rate to 3.85% from 3.60% might also cause the RBA some embarrassment, given that it confidently cut interest rates three times last year while forecasting that inflation would remain low.
Inflation has, instead, risen strongly and critics of the RBA will focus on the apparent policy error.
On Friday, senior officials from the RBA, which includes Governor Michele Bullock, will appear before parliament in a three-hour testimony on monetary policy. It is likely to be politically charged if interest rates rise.
In New Zealand, the focus will be on the employment data for the final quarter of last year on Wednesday. Unemployment remains high, but a broad array of economic indicators are now pointing to a recovery in the economy, so there is some chance that the jobless rate will fall from the current level of 5.3%.
China
It is all about PMIs for China, kicking off with official gauges due Saturday, Jan. 31.
The official data is likely to signal that manufacturing sector activity continued to grow at the start of the year, albeit at a soft pace. The reading will be closely watched to see if the rebound seen in December after eight months of negative prints continued.
"This will be one of our first glimpses at China's early economic momentum in 2026," said economists at ING.
A poll of 11 economists by The Wall Street Journal projects that headline PMI likely held steady at 50.1 in January. That would mark a second straight month above the 50 threshold separating contraction from expansion.
Economists at ING also look for a slight uptick in the non-manufacturing PMI, which captures services and construction, to 50.3 from 50.2.
On Monday and Wednesday, private gauges also take the pulse of China's manufacturing and services sectors, respectively.
December's RatingDog manufacturing tipped into positive territory, and another month of momentum will send a positive signal about the health of the economy as 2026 gets underway.
Asia Manufacturing PMIs
A slew of Asia manufacturing PMIs on Monday will show how the year started as tariffs continue to weigh factory activity around the region.
The January surveys for Taiwan, Japan, Korea and other economies will be scrutinized for signals of either better or worsening market conditions.
India
The Reserve Bank of India is due to make its interest rate decision Friday.
(MORE TO FOLLOW) Dow Jones Newswires
02-01-26 1914ET
