Fed Minutes Loom as Key Economic Data Reaches a Turning Point

Next week's economic data releases are expected to be relatively light on the domestic front in the US, with a focus on Wednesday's Federal Open Market Committee (FOMC) minutes. The minutes are likely to reiterate that most policymakers remain patient on adjusting interest rates, given softer labor market and inflation data since the July meeting.

Tuesday's housing starts report is expected to show a decline in residential construction activity, reflecting ongoing pressure from weak affordability and a challenging environment for builders. Over the past several months, single-family starts have grinded lower, while multifamily starts have been relatively more resilient but lacking upward momentum.

Abroad, Japan's GDP and CPI reports are due out on Monday and Friday, respectively, and are expected to reinforce the case for further Bank of Japan normalization. Canadian inflation is expected to remain contained enough to keep the Bank of Canada on hold.

In the UK, softer labor market conditions may be offset by firmer inflation, leaving the door open to additional Bank of England tightening later this year. Meanwhile, China's July retail and industrial activity data will likely show further loss of momentum at the start of Q3.