The week ahead is packed with important economic events, including the US CPI report, the ECB’s rate decision, and Japan’s GDP figures. Japan’s GDP for Q2 is forecasted to remain at 0.3%, thanks to boosts from business investment and exports. We can also look forward to Germany’s industrial output for July and China’s trade balance for August.

UN General Assembly and Apple

The UN General Assembly will likely discuss Iran’s nuclear program and may address Palestinian issues. An Apple event is set to introduce new products and could lead to higher iPhone prices. Additionally, the US Bureau of Labor Statistics (BLS) might release revised employment data. Chinese inflation data is expected on Wednesday, with July’s figures showing no growth. Norway’s CPI is predicted to hold steady at 3.1%. On Thursday, the ECB is anticipated to keep interest rates unchanged, focusing on broader economic projections. The Central Bank of the Republic of Turkey (CBRT) is expecting a 200 basis points rate cut after recent inflation data. The US CPI is predicted to increase by 0.3% for both headline and core figures in August. On Friday, UK GDP growth for July is forecasted at 0.1%. OPEC’s meeting on Sunday may discuss increasing oil production, shifting from previous plans to maintain cuts. This week will be heavily influenced by inflation data and central bank decisions, which could create volatility in interest rates and stock markets. The upcoming OPEC-8 meeting on Sunday is an important factor for energy prices. If they indicate a production increase, we might see crude oil prices drop, a shift from their earlier commitment to extend production cuts.

Focus on Inflation and Jobs

In the US, attention will be on inflation and job market data. Thursday’s CPI is expected to show an increase of 0.3%, a rate that has kept the Federal Reserve cautious for over a year. Importantly, Tuesday’s preliminary employment data revisions could reveal that fewer jobs were created than initially reported, complicating the Fed’s policy decisions and adding volatility to the S&P 500 options market. In Europe, the ECB is likely to maintain its deposit rate at 2.0% on Thursday. The press conference following the decision will be crucial, especially with rising political uncertainty in France. The widening spread between French and German bonds during election turmoil in June 2024 raises concerns; any instability from Monday’s no-confidence vote could lead to heightened activity in the CAC 40 index options. Tuesday’s Apple event is another key point of interest, with the stock experiencing high implied volatility. Given the expected price hikes and limited surprises, a “sell the news” reaction could happen, as seen in previous iPhone launches. We should look for opportunities to trade short-dated put options in case of a dip after the announcement. Data from China on Monday and Wednesday is expected to confirm ongoing economic weakness. Continued sluggish export growth and low inflation resemble the deflationary trends we saw throughout 2024. This may put pressure on commodity-linked currencies, like the Australian dollar, and affect industrial metals. Create your live VT Markets account and start trading now.

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