In the realm of global finance, few events hold as much significance as central banks addressing the issue of inflation. With economies around the world grappling with rising prices, it becomes imperative to understand the impact of central bank decisions on the global financial landscape.
Inflation takes over global markets
Inflation has been at an all-time high, and the US has been at the forefront of the market change. The economic calendar has another busy week ahead of it, with many market-moving statistics that might make for an intriguing summer. The US economic calendar is jam-packed this week.
According to reports, on Tuesday 27th, consumer confidence, and core durable goods orders begin off the week. With rising prices and a hawkish Fed, a drop in consumer confidence down below 100 would put a damper on riskier assets.
Market analysts point out that the spotlight will move to the weekly unemployment claims and the completed Q1 GDP figures on Thursday. Barring any adjustments to the GDP figures, jobless claims should have greater sway.
The Core PCE Price Index and personal spending/income figures, on the other hand, are likely to have the most impact. Better-than-expected personal spending/income statistics, as well as persistent inflation, would back up Fed Chair Powell’s two-rate hike forecast.
Other statistics include finalized Michigan Consumer Sentiment estimates, which should have a minor impact on the dollar. With Fed Chair Powell speaking on Wednesday, the Fed’s buzz will need to be taken into account.
What will be happening in Europe?
The EUR has a relatively calm week. Monday’s German Ifo Business Climate Index will set the tone before Tuesday’s German GfK consumer climate data. The German economic recession and global macroeconomic environment concerns may cause the Business Climate Index and its subcomponents to decline.
However, constrained labor market conditions ought to limit the Consumer Climate Index’s decline. On Thursday and Friday, the focus remains on the German economy. On Thursday, preliminary inflation figures for June and retail sales figures for May will be analyzed prior to the release of unemployment data on Friday.
Market analysts anticipate inflation to be the primary driver, with Friday’s preliminary euro area inflation figures also being significant. Investors should also examine ECB commentary in addition to statistics.
On the schedule to speak are ECB President Lagarde (Mon/Tues/Wed), Chief Economist Philip Lane (Wed), and Executive Board members Luis de Guindos (Wed), Fabio Panetta (Tues), Frank Elderson (Tues), Andrea Enria (Wed), Isabel Schnabel (Tues), and Elizabeth McCaul (Mon). Thursday will also see the publication of the ECB’s monthly Economic Bulletin.
Market happenings in and out of Asia
NBS private sector PMIs will be released on Friday, which will likely have an impact on China’s economy. A more severe contraction in the manufacturing sector would unnerve the markets, but it could fuel speculation about a Beijing stimulus package.
The Japanese Yen has another hectic week ahead of it. Retail sales will be scrutinized on Thursday ahead of the all-important Tokyo core inflation figures on Friday. Higher-than-expected core inflation figures would increase expectations of a Bank of Japan policy change. On Friday, the May industrial production numbers will be released. The numbers will set a new course for the Japan economy.
The Australian Dollar is set to have another calm week. The crucial CPI Report on Wednesday and retail sales figures on Thursday will have an impact. A rise in inflation and retail sales could drive the RBA to make additional policy changes.
The release of private sector credit numbers for May on Friday is expected to have little influence on the Australian dollar.
What lies ahead for crypto this week?
Crypto investors have had a tough run in the last couple of weeks. In addition, the inflation rates by the Fed in the United States have had a negative impact on the crypto industry. The SEC is expected to continue its intense industry crackdown. However, the market has begun a bull run, with Bitcoin sitting close to $31,000.
The outcomes of these central bank meetings have far-reaching implications for global financial markets. Investors, businesses, and individuals closely follow the decisions made by central banks to gauge the direction of interest rates, monetary stimulus, and market stability. These meetings provide valuable insights into the overall health of the economy and can shape investment strategies.
