Next week, a trio of major economic announcements and increased manufacturing improvement across the globe are sure to shake up market forces. US President Donald Trump is expected to announce a successor for the soon to retire US Federal Reserve Board Governor by weeks’ end. Speculation has been building that current Governor Christopher Waller will be the leading candidate to replace him. A few of those key economic indicators are set to come out. Including Producer Price Index (PPI) and Consumer Price Index (CPI) for July, which will be critical indicators to understand inflationary pressures across the US economy.
The Dow Jones index has gone largely sideways, indicating a market in doubt. At the same time, both Nasdaq and S&P 500 indices are showing beginner bullish indications. It’s hard to blame them — especially with all the captivating international developments. Such as the surprise drop in Japan’s GDP for Q2, and the continuing trade talks between the US and Canada.
Key US Economic Indicators on the Horizon
The upcoming week will witness the release of crucial economic data that could impact perceptions of inflation in the United States. PPI for July will provide important clues to the inflationary pressures producers are experiencing. Currently, that leaves open the possibility for a greatly diminished compliance burden on manufacturers to negatively impact consumers.
Furthermore, the Consumer Price Index (CPI) for July is anticipated to demonstrate the persistence of inflation within the US economy. These indicators greatly impact the Federal Reserve’s monetary policy decisions. The Fed has come under great fire for its handling of the inflation rate.
This week is made even more momentous by President Trump’s announcement of a new Fed Board Governor. It’s an important follow-through development that further boosts the impact of the recent releases. Waller’s prospective appointment spotlights his importance to the Fed’s strategy against inflation now. That decision is likely to result in either continuity or a reversal of policy direction, depending on the perspective his successor brings to the challenge.
Global Developments Affecting Market Sentiment
Japan will finally publish its Q2 GDP rates out to the world. An anticipated strengthening in the pace of growth should provide further support for the Japanese Yen. Economic growth in Japan could provide confidence to investors in Asian markets, impacting currency valuations as well as export competitiveness.
Germany’s ZEW indicators for August are set to be released. These indicators are heavily focused on measuring the market’s investor sentiment and can heavily bias market perceptions about Germany’s economic outlook. The European Central Bank is set to revise its GDP rate for Q2 and report on industrial output for June, further shaping economic forecasts across the Eurozone.
Next, don’t forget about the UK! June employment figures and Q2 GDP growth rates are just around the corner. The results may offer critical insights into the UK economy’s health post-Brexit and its recovery trajectory amidst ongoing global challenges.
Trade Negotiations and Monetary Policy Adjustments
Meanwhile, negotiations on the US-Canadian trade deal continue to languish without tangible progress. Traders are understandably upset by the prospect of this being a further headache to cross-border commerce. With both countries currently trying to iron out terms that might improve a shaky border and trade relations, market players are on high alert.
US Special Envoy to the Middle East, Witkoff, has laid the groundwork for strong negotiations. For him, it must demonstratively show progress with Russian President Vladimir Putin. If it comes to fruition, this development will have a profound effect on geopolitical relations and energy markets. Increasing instability across the globe will continue to modify and exacerbate these impacts.
Market participants in Australia are closely watching the next interest rate move by the Reserve Bank of Australia (RBA). So stay tuned for the announcement in the coming week. Any shifts in the direction of interest rates would likely have an outsize effect on the AUD’s value and global economic sentiment applied to the broader region.