Week Ahead Preview:
28th of July

This week, traders are awaiting a series of key economic data releases, along with interest rate decisions from several major central banks.

Markets expect the Bank of Canada to keep its policy rate unchanged at 2.75% for a third consecutive meeting, following its last rate cut in March. This decision is largely supported by inflation holding near the 2% target and stable economic growth, with GDP expanding by 0.5%.

However, the BoC may consider cutting rates by 25 basis points (or more) before year-end, depending on how trade tensions with the United States evolve. The ability of both sides to reach a trade agreement remains critical, as these tensions directly affect Canada’s economic outlook, influencing both growth and inflation numbers. The uncertainty is also weighing on the business climate, prompting many Canadian firms to defer hiring and investment decisions until the US/Canada trade relations become clearer.

Markets will pay close attention to the BoC’s upcoming press conference for signals on future monetary policy. Any indication from policymakers of a willingness to act in support of the economy, (especially if it is impacted by the U.S imposed tariffs) could strengthen expectations for additional rate cuts.

The US Federal Reserve is also set to announce its interest rate decision this week, with markets anticipating no change, holding rates steady at 4.5%. Investors will closely monitor Fed Chair Jerome Powell’s press conference for clearer guidance on future policy direction, particularly amid renewed pressure from President Trump to lower rates. Trump has recently hinted at the possibility of dismissing Powell, after consulting with members of Congress.

Since December, the Federal Open Market Committee has adopted a “wait-and-see” approach, refraining from further rate changes as it assesses the economic impact of tariffs set to take effect in August. These tariffs are expected to place upward pressure on inflation. As such, Fed officials are likely to delay any rate moves until they have more comprehensive data. Notably, Chairman Powell has noted that, absent these tariffs, rates would likely be lower by today.

Before the end of the week, markets will also digest the U.S. jobs report for July, which will provide key insights into the labor market, including job creation, unemployment, and average hourly wages. These indicators alongside inflation data play a central role in shaping the Fed’s monetary policy.

Forecasts suggest the U.S. economy added 110,000 jobs in July, down from 147,000 in June, with the unemployment rate expected to tick up from 4.1% to 4.2%. Stronger-than-expected data could reinforce the Fed’s cautious stance and delay any rate cut until after the September meeting—potentially setting the stage for a 25 basis point cut in October and December. Conversely, weaker data could signal a softening labor market and increase pressure on the Fed to act sooner, possibly leading to a rate cut as early as September.

Economic Data Highlights (UAE time)

Monday, 28th of July

• CAD – Whole Sales (Jun)

Tuesday 29th of July

• USD – Consumer Confidence (Jul)
• USD – Trade Balance (Jun)

Wednesday 30th of July  

• AUD – Inflation Rates (Q2)
• EUR – Gross Domestic Product (Q2)
• USD – ADP Employment Change (Jul)
• Bank of Canada rate decision and press conference
• US Crude Inventories
• Fed rate decision and press conference

Thursday 31st of July

• JPY- Industrial Production(Jun)
• Bank of Japan rate decision and press conference
• USD- Personal Consumption Expenditure (Jun)
• CAD- Gross Domestic Product (Jun)

Friday 1st of August

• GBP – House Price Index (Jul)
• EUR – Manufacturing PMI (Jul)
• EUR – Inflation rates (Jul)
• USD – Non Farm Payrolls report (Jul)