Investing.com — Friday’s U.S. jobs report will be the highlight of a holiday-shortened week, as markets await clarity on exactly when rate cuts might begin. Comments from Federal Reserve Chairman Jerome Powell will be closely watched, as will the minutes of the Fed’s latest meeting on Wednesday. Elections in France and the U.K. will also keep markets on high alert. Here’s your look at what’s happening in markets in the week ahead.
US labor market data
Investors will be turning their attention to Friday’s nonfarm payrolls report as they look for new clues as to when the Federal Reserve might begin cutting interest rates.
Economists expect the U.S. economy to add 189,000 new jobs in June, after a stronger-than-forecast increase of 272,000 in the previous month underscored the resilience of the labor market.
The Fed left interest rates unchanged at the start of the month, possibly postponing the start of rate cuts until December as policymakers look for more convincing signs that inflation is returning to the central bank’s target level or that the labor market is cooling.
Ahead of the release of non-farm payroll data, a report is expected on Tuesday that will show that the number of job vacancies fell again in May, suggesting that companies are more successful in filling vacancies.
Comments by Powell and Lagarde; Fed minutes
Fed Chairman Jerome Powell will speak at the European Central Bank’s annual forum in Sintra, Portugal, on Tuesday.
Powell will join ECB President Christine Lagarde in a panel discussion on “Monetary policy in an era of transition,” where investors will be looking for new insights into the future path of interest rates.
Inflation is declining after its sharp rise in the first quarter, but remains above the Fed’s 2 percent target.
Meanwhile, the minutes of the Fed’s June meeting on Wednesday will be examined to see how the central bank assesses the economic outlook and the factors affecting the monetary policy outlook.
Elections in France and Great Britain
On Sunday, the first elections will take place in France, the surprise new election that has shaken the markets.
Investors will be watching for clues about the outcome of the runoff election a week later, but a race in 577 districts, with candidates needing just 12.5% of the vote to make the runoff and including three-way races, means there could be uncertainty.
Meanwhile, polls predict a landslide victory for the opposition Labour Party in Thursday’s British election, sending the pound back to levels not seen since the Brexit vote in 2016.
Traders are expecting a return to stability after the severe political turmoil during the Conservatives’ 14-year rule and are speculating that Labour leader Keir Starmer could rebuild trade relations with Europe.
However, it remains to be seen how large a majority Starmer will have in Parliament.
Inflation in the Eurozone
The eurozone will release inflation data for June on Tuesday, following Germany’s report on Monday. Economists expect a slight slowdown in both headline and underlying indicators after an upward trend in May.
On Thursday, the ECB will publish the minutes of its June meeting, at which it cut its key interest rate for the first time since September 2019.
Although the ECB began raising interest rates later, its June cut put it ahead of the Fed in cutting interest rates, as the world’s largest central bank continues to be held back by above-target inflation.
Chinese Purchasing Managers’ Indices
Official data on Sunday showed that manufacturing activity in China fell for a second straight month in June while services activity slipped to a five-month low, fuelling calls for further economic stimulus as the world’s second-largest economy struggles to regain momentum.
The Caixin manufacturing purchasing managers’ index released on Monday is expected to decline slightly.
Analysts expect China to implement further policy support measures in the short term, and the government’s promise to increase fiscal stimulus will help boost domestic consumption.
–Reuters contributed to reporting
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