Investing.com — Friday’s U.S. employment report will be the highlight of a holiday-shortened week as markets look for clarity on when interest rate cuts will begin. Comments from Federal Reserve Chairman Jerome Powell and minutes from the U.S. central bank’s latest meeting on Wednesday will be closely watched. Elections in France and the UK will also keep markets on their toes. Here’s a look at what’s happening in the markets this week.
- US Employment Data
Investors will be watching nonfarm payrolls data on Friday for any new indications as to when the Federal Reserve might start cutting interest rates.
Economists expect the U.S. economy to add more workers in June after a better-than-expected 272,000 job gains last month signaled a resilient labor market.
The Fed earlier this month left interest rates on hold and delayed the start of cuts until perhaps December as officials look for more convincing signs that inflation is approaching the central bank’s target or evidence that the labor market is cooling.
A report due on Tuesday, ahead of the release of nonfarm payroll data, is expected to show payrolls fell again in May, suggesting companies are having success filling positions.
- Powell and Lagarde comments, Fed minutes
Fed Chairman Jerome Powell is due to attend the European Central Bank’s annual forum in Sintra, Portugal, on Tuesday.
Powell is due to take part in a panel discussion on “monetary policy in a transitional period” alongside European Central Bank President Christine Lagarde, with investors eager to hear any new insights into the future of interest rates.
Inflation has been declining after spiking in the first quarter but remains above the Fed’s 2% target.
Meanwhile, the Fed’s June meeting on Wednesday will likely analyze the central bank’s views on the economic outlook and factors that influence the outlook for monetary policy.
- French and British elections
France goes to the polls on Sunday in the first round of a shock general election that has roiled markets.
Investors will be watching closely for clues about the outcome of the second round of voting in a week’s time, but uncertainty could prevail in the 577-constituency race, where a candidate needs 12.5% ​​of the vote to advance to the second round and there will be a three-way contest.
Meanwhile, opinion polls are predicting a landslide victory for the opposition Labour Party in Thursday’s British general election, sending its approval rating back to levels not seen since the 2016 Brexit vote.
Traders see stability returning after 14 years of bitter political turmoil under the Conservative government and speculate that Labour leader Keir Starmer could reshape trade ties with Europe.
But it remains to be seen how big a majority Starmer will be able to secure in Parliament.
- Eurozone inflation
The euro zone is due to release its June economic data on Tuesday, following Germany’s release on Monday, but economists expect a slight slowdown in both headline and underlying indicators after May’s rise.
The ECB is due to announce the results of its June meeting, where it cut interest rates for the first time since September 2019, on Thursday.
The ECB started raising rates later, but the world’s largest central bank cut rates further than the Fed in June as it continues to struggle with above-target inflation.
- China PMI
China’s manufacturing activity fell for a second straight month in June and services activity slumped to its lowest level in five months, official data released Sunday showed, keeping up calls for more stimulus as the world’s second-largest economy struggles to regain momentum.
The Caixin manufacturing PMI, due to be released on Monday, is expected to decline.
Analysts expect China to roll out further policy support measures in the short term, while the government’s promise of stronger fiscal stimulus is expected to give a further boost to domestic consumption.
–Reuters provided reporting assistance
