Gear up for a whirlwind of economic revelations this week, each brimming with the potential to send ripples across the global financial arena. With Europe's pulse check via its quarterly GDP figures and a much-anticipated speech by FOMC Member Williams, the path forward for monetary policies on both sides of the Atlantic remains intriguingly uncertain. Combined, these revelations may just sway the pendulum of key decision-makers, influencing strategies and stakeholder sentiments alike.
Dive into our weekly roundup for a deep dive into these pivotal events and their potential implications.
🇪🇺 ECB President Lagarde Speech
The upcoming speeches by the European Central Bank (ECB) President, Christine Lagarde, scheduled for Monday and Tuesday, stand as crucial events on the economic calendar for investors and stakeholders in the European financial markets.
The ECB, under Lagarde's leadership, hinted at the possibility of a rate hike during its July meeting, an action that can potentially alter the landscape of the European economy. Such decisions typically exert significant influence on key European assets. For instance, a positive outlook for a rate hike could strengthen the Euro (EUR), impacting its standing against major currencies. This potential change also resonates with the DAX Index, a key indicator of the German stock market's health, which can experience fluctuations based on anticipated monetary policies.
🇪🇺 S&P Global Composite PMI
On Tuesday, September 5, at 11:00 GMT+3, the financial world will be keenly anticipating the release of the European S&P Global Composite Purchasing Managers’ Index (PMI). The previous reading stood at 47.0, signaling a contraction in the private sector (given that a PMI value below 50 indicates contraction, while a value above 50 implies expansion).
While analysts are not forecasting any dramatic shifts in this figure, even slight deviations from the expected value can introduce significant volatility, especially in currency pairs such as EUR/USD. As of the morning of Monday, September 4, the EUR/USD currency pair has climbed back to 1.0800 prior to the trading session's commencement. This upward movement is, in large part, attributed to the broad weakening of the US Dollar. This decline in the dollar's strength is influenced by a variety of factors, including the divergence in policies between the Federal Reserve and the ECB. The upcoming events, such as ECB President Lagarde's speech and the aforementioned PMI release, are pivotal in determining the pair's trajectory.
🇨🇦 BoC Interest Rate Decision
Come Wednesday, September 6, at 17:00 GMT+3, all eyes will be on the Bank of Canada (BoC) as they unveil their interest rate decision. With the current rate set at 5.00%, prevailing sentiment suggests that the BoC may decide to keep the rate unchanged this round, giving the markets a pause. Such a decision or even hints toward this direction may cause notable fluctuations in the Canadian dollar (CAD), particularly evident in the USD/CAD currency pair.
At present, the USD/CAD is meandering around the 1.3600 mark, with a modest increase to 1.3590 observed during Monday's Asian session.
Notably, Canada's Q2 GDP numbers were a cause for concern, as the economy saw an unexpected contraction of 0.2% annually, contrasting sharply with predictions of a 1.2% growth.
Given these economic headwinds, the anticipated BoC decision is even more critical. While many expected a 25 basis point (bps) rate hike due to prior positive momentum, the disappointing GDP data might prompt a reconsideration.
🇪🇺 GDP q/q
Thursday at 12:00 GMT+3, the European Gross Domestic Product (GDP) for the quarter will be released. The previous quarter's figure stood at a growth of 0.3%. Analysts are not anticipating any dramatic changes for this release. Nonetheless, any deviation from this expectation can create ripples in the European equity markets. Investors and traders will be closely monitoring this number, as even slight variances can have implications for the broader European economic outlook.
🇺🇸 FOMC Member Williams Speech
Later in the day, at 22:30 GMT+3, the financial community will turn its gaze to the United States, as US FOMC Member Williams takes the stage. His speech comes a mere two weeks before the next Federal Open Market Committee (FOMC) meeting scheduled for September 20. Given the proximity to the meeting, Williams' remarks will be scrutinized for hints on the Federal Reserve's next move. The core question on everyone's mind is whether the Fed is leaning towards a pause or gearing up to increase rates by another 25-50 basis points. This speech might very well serve as a decisive signal, shaping expectations for the upcoming FOMC decision.
That's it for this week! 👋
