The week kicks off slowly for Markets, but really starts to pick up on Tuesday with Eurozone inflation data.
Core CPI is expected to stay soft at 2% YoY, while monthly numbers remain flat – with European inflation hanging around 2%, the European Central Bank should hold still for a while now.
A very small 10 bps cut premium is priced in for the rest of the year, but except for a sudden fundamental change, the ECB Main policy rate should stay between 2% to 2.15%.
In the UK, attention turns to Friday with Retail Sales (expected +0.4% MoM), a release that could give the Pound some direction after a quiet stretch. A weak number would reinforce the idea that consumer demand remains fragile, while a beat may push back some dovish expectations from the Bank of England.
For North America and actually for all markets, the spotlight is firmly on the US labor market.
Thursday’s ADP Employment Change will provide a first look, before Friday’s Nonfarm Payrolls report sets the tone. Markets expect around 78k jobs added – downward revised expectations after the prior month surprise revisions.
The US unemployment rate is still only at 4.2%!
Alongside payrolls, Average Hourly Earnings will be crucial to gauge wage pressures.
Less influential but released at the same time, Canadian employment data (including unemployment, currently at 6.9%) could bring extra volatility to USDCAD.
Don’t forget the Canadian Trade Balance data, releasing on Thursday at 8:30 A.M.
Finally, don’t overlook PMI releases across the board – ISM Manufacturing on Tuesday, ISM Services on Thursday– all of which will feed into the global growth narrative.
