(MENAFN– ecpulse) The global financial markets saw a light trade over the past week, after recent attempts for a rebound from the major selloff amid the lingering geopolitical tensions in Eastern Europe and the Middle East. But the will the calm extend to the days ahead Traders, get ready to rumble!
This week, the US will steal the lights with a fresh round of top-tier economic fundamentals, including the Federal Reserve`s policy meeting and June employment situation report; two fundamentals worth watching closely. Meanwhile, Asia and Europe will also follow up with a slew of data, but the major focus will be all about the US economy and its distant recovery.
The enthusiasm will start with the most recent figure of the Gross Domestic Product, due to be released on Wednesday. The US economy probably grew 2.9% in the second quarter, compared to 2.9% contraction in the first three months of the year.
On the evening of the same day, we will also watch the Fed`s annouce the rate decision, with expectations to keep the benchmark interest rate at a record-low 0.25%, as well as the completion of the Federal withdrawals for the quantitative easing policy, bringing down the program to $35 billion $25 billion.
The QE3 program will be reduced by buying government bonds to 15 billion dollars from 20 billion, with a reduction of real estate-backed bond program to $10 billion from $15 billion. The Fed is expected to continue withdrawals until October 2014 amid growing expectations that the US central bank will hike the interest rates earlier than expected.
The US jobs report, due to be released Friday, is expected to indicate more evidence on the health of the US labor market, which has recently witnessed a remarkable development after a very low unemployment rate, expected to stay at 6.1% in July, while the consensus are calling for 225 thousand gain in non-farm payrolls this month, from the previous increase of 288 thousand.
The US markets are expected to see a choppy trade with the start the week, ahead of key data the Fed`s policy, which is expected to give the U.S. dollar more power, and perhaps cause further losses for commodity markets and high-yielding currencies, while global stock indices continue to rack up gains amid signs of an advance in the world economic recovery
This week, investors will focus on data from the euro area amid concerns that geopolitical tensions and low inflation in the euro region would hurt recovery.
The 18-nation region will face a confidence test this week as it releases its monthly confidence report, where the data may signal a linger in economic confidence in July at 102.0.
Data released recently has showed that German business confidence plunged for a third month in July while the investor confidence gauge resumed its drop for a seventh month in July.
Meanwhile, there are concerns that the low inflation may derail recovery, where a report due this week may show the rate steadied at 0.5 percent in July.
Another report will show that unemployment will remain unchanged at 11.6 percent in June, according to median forecasts.
However, last week’s PMI data gave a glimpse of hope that recovery will gain momentum.
PMI composite of manufacturing and services came in at 54.0 this month from 52.8 in June, higher than median forecasts of 52.8. The reading matched a three-year high posted in April, where the gauge held above the 50 benchmark for a 50 th straight month.
The ECB decided in June to cut its benchmark interest rate to 0.15 percent from 0.25 percent and the deposit rate to -0.10 percent from 0.00 percent.
The bank also announced some measures including “further reductions in the key ECB interest rates, targeted longer-term refinancing operations, preparatory work related to outright purchases of asset-backed securities and a prolongation of fixed rate, full allotment tender procedures,” ECB bulletin for June said.
“The Governing Council decided to suspend the weekly fine-tuning operation sterilizing the liquidity injected under the Securities Markets Programme,” the bulletin added.
In the UK, PMI manufacturing will probably show an ease in expansion to 57.2 in July from 57.5 in June.
The coming days will bring up recent figures on Japanese unemployment rate, which is expected to remain at 3.5% in June. later this week, the industrial production is expected post 1.2% drop from 0.7% during the same month.
The Japanese economy continue to gather momentum in the third quarter of the year, but the high value of the yen continue to hinder the pace of economic recovery amid geopolitical tensions and growing appeal for the currency as safe haven.
China`s economy will be eyed as well ahead of the PMI manufacturing release for July, which is expected to show a reading of 51.3 from the previous 51.0, adding to positive signs the recovery probably remained on track this month.
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