Week Ahead Preview:
26th of August

Markets await a series of economic data releases this week that will directly impact the monetary policy decisions of major central banks. Investors will be particularly focused on the preliminary European Consumer Price Index data for August. This data is expected to reveal a decline in European inflation rates, potentially dropping from 2.6% in July to 2.3% in August, marking the lowest levels in nearly three years. Core inflation (excluding energy and food items) is also expected to decrease slightly, from 2.9% in July to 2.8% in August. Markets have already priced in a possible 25 basis point interest rate cut by the European Central Bank at its September meeting, and if the actual data meets or falls below expectations, it could further increase the likelihood of an additional 25 basis point cut at the ECB’s October meeting.

Meanwhile, across the Atlantic, investors will be eagerly following the data release of the Personal Consumption Expenditures Index, the Federal Reserve’s preferred measure of inflation. Markets are debating whether the U.S. Federal Reserve will opt for a 25 or 50 basis point rate cut at its upcoming meeting, and this data may play a crucial role in shaping that decision. According to Bloomberg, expectations suggest that the data might move counter to the Federal Reserve’s desired direction, with the year-over-year PCE index potentially rising from 2.5% in June to 2.6% in July, and the year-over-year core index from 2.6% to 2.7%. If the data comes in line with these expectations, it could bolster the case for a 25 basis point cut in September. However, if the data comes in below these expectations, it could pave the way for a more substantial 50 basis point rate cut.

Economic Data Highlights (UAE time)

Monday, 26th of August

• EUR – German ifo Business Climate
• USD – Durable Goods Orders (July)
• CAD – Whole Sales (July)

Tuesday, 27th of August

• CNY – Industrial Profits (July)
• EUR – German GDP (Q2)
• USD – House Price Index (June)
• USD – Consumer Confidence (Aug)

Wednesday, 28th of August

• AUD – Consumer Price Index (July)
• EUR – German GfK Consumer Climate (Sep)
• US Oil Inventories

Thursday, 29th of August

• Fed Bostic Speech
• EUR – Consumer Confidence (Aug)
• EUR – German Inflation Rates (Aug)
• USD – Gross Domestic Product (Q2)
• USD – Pending Home Sales (July)

Friday, 30th of August

• JPY – Industrial Production (July)
• JPY – Consumer Confidence (Aug)
• EUR – German Retail Sales (June)
• EUR – German Unemployment Rate (Aug)
• EUR – Inflation Rates Flash Estimate (Aug)
• CAD – Gross Domestic Product (Q2)
• USD – PCE (Fed’s inflation rates – July)
• USD – Michigan Consumer Sentiment (Aug)