Investing.com – Global financial markets will focus on this week’s U.S. employment report due Friday to gauge the strength of the world’s largest economy and how it will impact the Federal Reserve’s view on monetary policy through the end of the year.
Market players will also focus on a monetary policy decision from the Bank of England amid recent calls from policymakers for higher interest rates in the months ahead.
In the euro zone, investors will await monthly inflation data to assess the timing of when the European Central Bank will start unwinding its massive asset purchase program.
Elsewhere, traders will be looking ahead to monthly data on China’s manufacturing sector amid recent signs that momentum in the world’s second largest economy remains strong.
A monetary policy announcement from the Reserve Bank of Australia will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. U.S. employment report
The U.S. Labor Department will release its July nonfarm payrolls report at 8:30AM ET (1230GMT) on Friday.
Most of the focus will likely be on average hourly earnings figures, which are expected to rise 0.3% after gaining 0.2% a month earlier.
Besides the monthly jobs report, this week’s calendar also features U.S. data on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed’s preferred metric for inflation.
Conviction for another rate hike from the Fed before the end of the year has faded, according to Investing.com’s Fed Rate Monitor Tool, with just 35% of market players expecting another move by December due to worries over the subdued inflation outlook.
For the stock market, investors will digest another heavy week of earnings, with about a fifth of the S&P 500 companies set to post results. Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) will garner most of the attention.
Focus will also be on headlines coming out of Washington, where the Senate is expected to continue working on a healthcare bill to repeal Obamacare. The investigation into U.S. President Donald Trump campaign’s ties to Russia will continue to get attention.
2. Bank of England policy announcement
The Bank of England will announce its rate decision at 1100GMT (7:00AM ET) on Thursday. The central bank will also publish its Quarterly Inflation Report at the same time. BOE Governor Mark Carney will hold a press conference shortly after the announcement.
Most economists expect the central bank to keep rates at their record low to shore up economic growth, though some are calling for a hike.
Three out of eight policymakers voted for a hike at the last meeting, but one of the three, Kristin Forbes, is no longer at the BOE.
Most investors reckon that until wages start to pick up and there is more certainty around Brexit, rates will stay at current record-low levels.
Besides the BOE, traders will focus on a trio of reports on activity in the manufacturing, construction and services sectors for further indications on the continued effect that the Brexit decision is having on the economy.
Some BOE policymakers have started to call for higher interest rates in the months ahead due to the recent surge in inflation, which was caused largely by the plunge in sterling following last year’s Brexit vote.
But a recent run of weak data and deep uncertainty about the impact of Brexit on the economy have cooled the speculation that the BOE is poised to start removing its crisis-level stimulus.
3. Euro zone flash inflation figures
The euro zone will publish flash inflation figures for July at 0900GMT (5:00AM ET) Monday.
The consensus forecast is that the report will show consumer prices rose 1.3% this month, unchanged from June and well short of the ECB’s target of just below 2%.
Perhaps more significantly, the core figure, without volatile energy and food prices, is seen holding at 1.1% from a month earlier.
In addition to the inflation data, the euro zone will publish a preliminary report on second-quarter economic growth on Tuesday. The region’s economy is forecast to expand 0.6% in the April-June period, equivalent to an annualized 2.4%.
The European Central Bank called for patience and persistence in getting inflation back up to its target earlier this month. Central bank chief Mario Draghi added that discussions on the future of the bank’s asset purchase program would take place in the fall.
4. Chinese manufacturing data
The China Federation of Logistics and Purchasing is to release data on July manufacturing sector activity at 0100GMT on Monday (9:00PM ET Sunday), amid expectations for a modest downtick to 51.6 from June’s three-month high of 51.7.
Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction.
China’s economy grew a faster-than-expected 6.9% in the second quarter, matching the first quarter’s pace, supported by solid exports, industrial production and consumption.
5. Reserve Bank of Australia policy meeting
The RBA’s latest interest rate decision is due on Tuesday at 0430GMT (12:30AM ET).
Most economists expect the central bank to keep rates unchanged at the current record-low of 1.5% for the 11th straight meeting and maintain its neutral policy stance, as it balances the risk of fueling further borrowing in the country’s red-hot property market against tepid inflation.