Volatile Week Ahead: Inflation Readings, Earnings Reports, and Interest Rate Prospects on Tap
Markets are bracing for a packed week of macroeconomic data releases and corporate earnings reports. The spotlight will be on key inflation readings, preliminary PMI indicators, and financial results from major US retail chains.
The USDJPY pair is expected to be volatile due to Japan's Q2 GDP estimates, its Q2 CPI inflation reading, and the preliminary PMI indicator for the economy. On the dollar side, Wednesday's minutes from the recent Fed meeting will be crucial in determining interest rate prospects.
The Bank of Japan remains under pressure due to rising living costs and wage pressures, with a 80% chance of a rate hike in September already priced in. If Friday's inflation surprises to the upside and Wednesday's Fed minutes reveal greater concerns among American policymakers about an economic slowdown, the USDJPY pair could come under downward pressure.
US stock indices are entering a test of domestic consumer health with financial reports from retail giants Home Depot, Target, Lowe's, and Walmart. Walmart's earnings serve as a litmus test for assessing nearly 70% of US GDP generated by consumption.