It’s a big week for US data. USD has been steadily losing ground since last week and is down against the EUR 0.17% as of this morning. With the ECB making a surprise 50bps hike last week, the wheels are set in motion for playing catching up with the FED, but is it too little too late?
The FED will raise its interest rates again this Wednesday, and we could expect another big 75bps. Analysts see this as the last of big hikes due to core inflation shows signs of slowing. The job market is also starting to show signs of weakness which may turn the FED more dovish to prevent a recession pre-elections this November.
US earnings begin rolling out this week and will reveal the balance sheets of the world’s biggest companies. Alphabet and Microsoft are on Tuesday, Meta on Wednesday and Apple and Amazon on Thursday. With large corporations cutting back on hires and earnings predicted to drop in the last quarter, we could be edging closer to a recession.
Oil prices have also been losing steam due to concerns about an economic slowdown, which have outranked low supply concerns, another recession indicator.
Over in the Euro-zone, inflation data is out on Friday and is expected to accelerate to a record 8.7%. The ECB will have to continue to battle inflation with interest hikes, which may look appetising to investors should the FED begin to slow its pace. Still, the continent is facing much more significant problems with the ongoing war, energy supply crisis, and political uncertainty in Italy. With this in mind, if the ECB acts too aggressively, it could risk an early recession.
What to watch this week:
Tuesday
US Earnings Alphabet (Google), Microsoft
USD New Home Sales (MoM)(Jun)
USD Consumer Confidence(Jul)
Wednesday
Fed Interest Rate Decision
US Earnings Meta
USD Durable Goods Orders
Nondefense Capital Goods Orders ex Aircraft
Thursday
USD Gross Domestic Product Annualized
USD Initial Jobless Claims Average
Friday
EUR Gross Domestic Product
USD Michigan Consumer Sentiment Index(Jul)
US Earnings Amazon