It was a big week again last week for financial markets as the war in the Middle East continued to rage on, sending Oil prices soaring through $100 again, while on the fundamental front, markets are now heavily favouring a Fed rate hike in the coming days.
Volatility looks set to remain high in the coming week, with three major central banks set to make rate calls, two of which have seen significant changes in expectations over the past few weeks, while there is also a raft of major data releases due.
On the geopolitical front, the war in the Middle East again seems to be escalating on a daily basis, and despite potential good news on Friday with regard to a reopening of the Strait of Hormuz, developments in the past 48 hours have indicated that peace still looks a long way off.
Here is our usual day-by-day breakdown of the major risk events this week:
It is a quiet calendar start to the trading week on Monday, with just Canadian CPI data later in the day likely to influence markets. However, geopolitical updates from the weekend should see another lively start to the trading day, while any further updates during the sessions should see volatility increase.
The Asian session will see a focus on Chinese markets midway through the day, with a big data drop due that includes the latest Industrial Production, Retail Sales and Unemployment Rate numbers. There will be an early focus on UK markets on the European open, with employment data due out, while the New York session sees the release of the Empire State Manufacturing Index data.
It is a huge day for financial markets on Wednesday, with the crucial FOMC interest rate call coming near the end of the day. However, before we get to the big event, UK CPI and PPI numbers are also due out during the London session, while US Retail Sales numbers are also due out earlier in the New York day.
The event calendar kicks off early in the day on Thursday, with the New Zealand GDP data due for release early in the Asian session. The London session will again see the focus strongly on UK markets, with the Bank of England’s interest rate call due out midway through the day, while the US session sees the usual release of the Weekly Unemployment Claims numbers, as well as the Philly Fed Manufacturing Index data.
The week looks likely to close out with another big day again, with the third major rate call of the week due out. This time, it is the Bank of Japan’s turn and, as usual, there is no set time for the rate call; however, it is normally around Tokyo lunchtime, with traders expecting plenty of volatility in the Yen around the update. The London session again sees UK data released early in the day, with the latest Retail Sales numbers due out, and although there is nothing of note on the calendar in the New York session, the market is expecting things to remain lively all the way to the final bell.
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