ECB Rate Decision, US Inflation Data to Drive Markets Next Week

The week ahead will be shaped by key economic events, including the European Central Bank's (ECB) rate decision, US Consumer Price Index (CPI), and Producer Price Index (PPI) data.

The strong US jobs report released earlier this month has made a September rate hike easier to justify for the Federal Reserve, particularly with services inflation and oil prices still running high. The labour market is no longer giving the Fed a strong reason to rush into lower rates.

Next week's CPI and PPI data will be crucial in determining whether inflation is cooling enough for the Fed to keep policy on track for easier conditions. A soft-core CPI would push Treasury yields lower and improve the outlook for rate-sensitive sectors, especially large technology stocks.