The UK employment report showed a small rise in the unemployment rate, but wage growth is still strong. This has led to predictions of two interest rate cuts by the end of the year. The other key item to watch is the final Eurozone CPI data, which is not expected to have a major impact on the markets. In the upcoming American session, the focus will be on US Jobless Claims and Retail Sales data. Initial Claims are expected to rise to 235K from 227K previously, while Continuing Claims are projected to stay at 1,965K. This data suggests a steady labor market with low firings and low hiring.

US Retail Sales Month Over Month

US Retail Sales Month-over-Month (M/M) is forecasted to be 0.1%, up from a previous -0.9%. The Ex-Autos M/M figure is expected to increase to 0.3% from -0.3%. The Control Group is predicted at 0.3%, a slight drop from 0.4% last time. Despite its ups and downs, retail sales data is seen as an important market indicator. Today, several central bank officials will speak, including ECB’s Villeroy and Fed’s Kugler, Daly, Cook, and Waller at different times. Their discussions may provide insights into future economic policies. The weaker UK employment report is expected to impact the coming weeks. The unemployment rate rising to 4.3% has influenced market expectations, with SONIA futures indicating two full rate cuts by the Bank of England before the year ends. This fits into a global trend where central banks are starting to overlook stubborn inflation in favor of slower growth. The upcoming US jobless claims will be examined in this context. If claims exceed the expected 235K, it would reinforce the “low firing, low hiring” trend. Recent JOLTS data showed job openings have dropped to a three-year low, suggesting the labor market’s strength is waning, which may put pressure on the Federal Reserve.

Central Bank Speakers

Although US retail sales data can be unpredictable, it might be the most significant market mover today. With US consumer credit card debt recently exceeding $1.1 trillion, any weakness in the expected 0.1% could indicate consumers are running out of steam. In the past, a major miss in this area has led to a sharp decline in Treasury yields, and we anticipate a similar response this time. The central bank speakers should offer further insights, and we will be looking for a dovish consensus. Waller’s remarks are particularly important, as he has shaped market expectations toward a more patient policy approach. On the other hand, any unexpected hawkish comments from neutral members like Kugler or Cook could create a chance for a market reversal. Create your live VT Markets account and start trading now.

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