Next week, attention will be on the US ISM Services PMI, the Bank of England’s rate decision, job reports from Canada and New Zealand, and trade data from China. The schedule will also include OPEC+ meetings, US Employment and Durable Goods numbers, along with PMI and trade balance reports from the Eurozone, UK, US, China, Canada, and New Zealand.

OPEC+ Meeting

OPEC+ will gather to discuss a potential increase in oil output after earlier hikes. Expectations vary, with possible adjustments depending on global compliance and demand. The US ISM Services PMI and S&P Global data show growth in services activity, unlike manufacturing, raising questions about whether this growth can continue amid rising inflation and uneven economic conditions. New Zealand’s Q2 job report is expected to show a slight employment drop and higher unemployment, as wage growth slows. Analysts predict job losses among younger workers but also see potential exits from the labor market. The Reserve Bank of India (RBI) is likely to keep rates steady after a recent cut, considering inflation and currency factors while managing liquidity and potential policy changes.

Bank of England Rate Outlook

The Bank of England is likely to reduce the Base Rate by 25 basis points (bps) due to recent data and inflation worries. They are trying to balance inflation risks with economic growth and the job market. Banxico may also ease rates, with a predicted 25bps cut. Recent data supports a cautious monetary policy in light of ongoing trade tensions. New Zealand’s inflation forecasts are expected to rise, which could affect the Reserve Bank’s rate decisions. Inflation expectations are increasing across different time frames. The Swedish CPIF is expected to rise due to higher electricity prices, with more rate cuts possible. China’s trade balance might show export growth and fewer imports, influenced by global demand pressures and trade talks. Canada’s job report will reveal labor market trends while the Bank of Canada (BoC) holds rates steady. Markets are considering potential rate cuts depending on economic trends. The Bank of Japan (BoJ) kept its policy rate unchanged, citing uncertainties in trade policy and inflation. The upcoming summary of opinions will provide more insight. Since the OPEC+ meeting happens when markets are closed, oil prices could gap at Monday’s opening. The latest data from the Energy Information Administration (EIA) indicates a surprise increase in U.S. crude inventories by 1.2 million barrels last week, possibly heightening bearish sentiment from the meeting. Traders might consider buying short-dated straddles on oil ETFs to capitalize on expected volatility, regardless of the direction. The US ISM Services data on Tuesday is crucial, especially since the flash reading reached a seven-month high. With the latest Consumer Price Index (CPI) stable at 3.5% year-over-year, a strong ISM reading could prompt bets on a more hawkish Federal Reserve this autumn. This scenario could increase volatility in short-term interest rate futures, making protective puts on bond ETFs a smart hedge. We expect the Bank of England’s 25 basis point rate cut on Thursday to be mostly priced into the market. The real opportunity will come from the vote split and forward guidance, particularly as recent ONS data indicated a 0.1% contraction in UK Q2 GDP. Options on the GBP/USD pair might be useful since a surprisingly dovish tone could quickly devalue the currency. On Thursday, the New Zealand inflation survey will be closely watched, with rising expectations. In July, the annual inflation rate unexpectedly rose to 2.8%, complicating the outlook for the Reserve Bank of New Zealand. Any further increases could lessen the chances of near-term rate cuts and support the NZD. We are monitoring the job reports from New Zealand on Tuesday and Canada on Friday as indicators of economic strength. Canada’s unemployment rate hit a multi-year high of 6.9% in June, so another weak report could solidify expectations for a BoC rate cut this year. This outlook might justify maintaining bearish positions on the Canadian dollar through futures or buying put options. China’s trade data on Thursday will be scrutinized amid global growth concerns, especially with the U.S. trade truce set to expire on August 12. Following a disappointing June industrial production report of just 3.8% growth, another weak number could negatively impact risk assets. Traders might consider buying puts on copper futures or the AUD/USD pair as protection against a negative surprise. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now