Global Markets Eye US and German Inflation Data and Cisco Earnings
The coming week is expected to be crucial for global markets as key inflation readings from the US and Germany, along with Cisco's quarterly earnings, are due.
In the US, the consumer price index (CPI) for July is forecasted to show a 0.2% increase, following a 0.4% decline in June. The annual inflation rate is projected to ease to 3.4% from 3.5%, while core CPI is expected to rise 0.2% month-on-month after remaining unchanged in June.
The Nasdaq 100 has surged over the past week, but could be vulnerable around the CPI release. A hotter-than-expected reading might suggest that June's softer data was an anomaly rather than a sustained trend, potentially increasing pressure on the Federal Reserve to hike rates in September and weighing on risk assets.
In Germany, inflation accelerated sharply in July, with consumer prices rising 0.8% month-on-month and 2.8% year-on-year, both above expectations. This could serve as a catalyst for the EUR/USD, which has recently strengthened against the dollar but stalled near the 78.6% retracement level.
Cisco is scheduled to report its quarterly earnings, with analysts expecting earnings to rise 18.2% to $1.17 a share and revenue to increase 14.7% to $16.8bn. The stock's options positioning has a bullish bias, but this could leave it vulnerable to a post-earnings sell-off as implied volatility and hedging flows unwind.