**Eventful Week Ahead: Central Bank Decisions and Economic Data in the Spotlight**
*Adapted and expanded from the original article by FXStreet’s Eren Sengezer*
The upcoming trading week will be shaped by several key events: interest rate decisions from major central banks, significant macroeconomic data releases, and market trends shaped by evolving sentiment. Currency traders and investors in other asset classes will be closely watching announcements from the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ). Additionally, heavyweight data releases such as U.S. inflation figures, GDP results, consumer confidence data, and employment statistics from various countries will heavily influence market movements.
This comprehensive preview outlines what to watch for in global financial markets over the week and provides insights based on recent trends and expectations from analysts and economists.
## Central Bank Decisions to Dominate the Headlines
This week begins with markets gearing up for significant decisions from the world’s major central banks. These decisions are not being made in a vacuum. They will reflect how each central bank views both domestic and global economic challenges, including inflation pressures, slowing growth, and lingering financial vulnerabilities brought on by two years of aggressive tightening.
### 1. US Federal Reserve (FOMC Meeting – Wednesday)
– The Federal Open Market Committee (FOMC) will hold its policy meeting on Wednesday.
– Market consensus expects the Fed to maintain its federal funds rate at 5.25%-5.50%.
– According to the CME FedWatch Tool, traders are pricing in a high probability (over 90%) of no change in interest rates, but attention will turn to the language of the statement and Chair Jerome Powell’s press conference.
– After digesting May’s softer-than-expected inflation data and the May jobs report (which revealed strong hiring but a slight uptick in unemployment), investors are eager to interpret whether Powell maintains a hawkish stance or begins to open the door more clearly to rate cuts later in 2024.
Key points to watch during the Fed announcement:
– The FOMC’s updated economic projections (Summary of Economic Projections, or SEP), including the dot plot.
– The Committee’s view on the progress toward inflation returning to the 2% target.
– Powell’s tone regarding future policy, especially in light of slowing housing data and consumer spending.
According to analysts from ING and Goldman Sachs, the Fed may reduce its number of projected interest rate cuts from three to only one or two for the rest of the year, depending on how confident policymakers feel about the trajectory of inflation.
### 2. European Central Bank (ECB – Thursday)
– The ECB is widely expected to keep its main refinancing rate at 4.25%, after cutting it by 25 basis points in June.
– Key to this week’s ECB announcement will be how committed President Christine Lagarde remains to a “data-dependent” path for future rate cuts.
What markets are watching:
– How the ECB balances its first rate cut with recent inflation figures, which remain above the 2% target.
– Whether the next rate cut might come in September or later in the year.
– Any mention of Eurozone wage growth or services inflation, which persist as upside risks to price stability.
Lagarde’s post-meeting press conference will be crucial. Any signs that the ECB is pausing before delivering further rate adjustments could push the euro higher. On the other hand, dovish commentary could increase bets for additional cuts as early as September, weakening the euro in the process.
### 3. Bank of Japan (BoJ – Friday)
– The BoJ is facing growing market speculation that it will begin to normalize monetary policy after decades of ultra-loose conditions.
– While a rate hike is not expected at this meeting, analysts anticipate hints about future tightening steps or the possible scaling back of its bond-buying program.
Important considerations:
– Japan’s inflation remains stable but not excessively high, keeping pressure off the BoJ in the short
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