The week kicks off with the release of flash manufacturing and services PMIs for the eurozone, the UK, and the US. In Japan, the BoJ will disclose core CPI year-on-year figures, and Canada is set to publish its inflation data. Fed Chair Powell will testify about the Semiannual Monetary Policy Report in Congress, with important appearances scheduled for Tuesday and Wednesday. Australia will also release its inflation data on Wednesday.

US Economic Data Release

On Thursday, the US will release its final GDP quarter-over-quarter, weekly unemployment claims, and month-over-month durable goods orders. Japan will report Tokyo core CPI year-on-year on Friday, while Canada will provide its monthly GDP figures. The US will publish core monthly PCE price index data along with personal income and spending numbers. Canada is expecting a 0.5% month-over-month CPI, up from -0.1% previously, while overall inflation is projected to stay low at 1.7%. Australia’s CPI year-on-year is predicted to drop to 2.3%. In the US, minor changes in core durable goods orders are anticipated, with total orders likely improving due to increased aircraft demand. Japan’s Tokyo core CPI year-on-year is expected to decrease slightly as government measures help ease prices. The labor market remains strong, and retail sales could benefit from government subsidies. In the US, the core PCE price index month-over-month is expected to hold steady at 0.1%, with personal income and spending also forecasted to remain unchanged. While consumer activity is softening, overall spending is still above pre-pandemic levels, supported by income growth, partly due to social security adjustments. This week starts with new data aimed at revealing industrial and service sector performance in major economies. The initial PMI readings provide an early look at business conditions and are often used to predict changes in the economy before official figures are released. This includes purchasing manager sentiment from the eurozone, UK, and US, which can signal future shifts in production or demand. If PMIs rise above or fall below 50, they indicate expansions or contractions. Small movements around this mark require careful observation, as they may lead to significant adjustments in rate expectations.

Canada’s Inflation and Economic Outlook

In Canada, the inflation forecast remains relatively stable. Consumer prices are expected to rise slightly month-over-month but will still be below central bank targets year-over-year. With low price pressure, policy decisions may depend more on domestic growth and employment strength. If GDP shows persistent sluggishness or signs of household stress, policy adjustments could happen sooner. In Australia, a decrease in year-on-year inflation could argue for keeping rates steady, especially as underlying pressures show signs of less persistence. Previous months showed supply-side factors fading, and this week’s data will clarify whether that trend continues. Traders ready to adapt quickly may find opportunities if inflation data surprises on the downside. Meanwhile, Powell will make consecutive appearances in Congress, allowing for detailed discussions about economic conditions, risks, and policy direction. Though the Fed often uses formal language, changes in tone or pointed questions can shift market rate expectations swiftly. Traders typically adjust rate cut odds around these events—especially when there’s limited upcoming data—so remaining flexible through Wednesday is key. Later in the week, durable goods data and revised GDP figures will be released in the US, but much attention may be on aircraft order numbers, which can heavily influence the overall data. It’s important to prioritize non-transport categories. If core orders stagnate or decrease, it could signal hesitation from businesses in long-term investments, affecting growth sentiment. Japan’s inflation figures, particularly for Tokyo, will provide early indications. A slight decrease in the core CPI is expected as previous government efforts ease price pressures. Despite this, strong wage growth and a robust labor market should support spending, which may be reflected in upcoming retail data. If retail remains strong, it will support the case for delaying policy normalization, focusing more on sustainable domestic demand in light of global challenges. In the US, the core PCE price index is a crucial indicator for monetary policy, more so than CPI. The market expects stability this month. If income and spending meet expectations, we might see little immediate change in policy views. However, any increase in PCE—even a 0.2% rise—could influence market direction. Social security changes continue to enhance consumer purchasing power, and the Fed will watch how this impacts pricing pressure. Throughout the week, forward-looking data will be more significant than past revisions. Even small signs of softening in consumer spending, particularly in discretionary areas, could lead to a reevaluation of interest rate resilience. For those managing exposure, this week is best observed with attention to trends; the rate of change is more crucial than the current level. A careful approach to position sizing and a willingness to handle short periods of volatility may be more effective than high-stakes bets. Central bank reactions are finely balanced right now, allowing little room for poor timing. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now