Week Ahead – Peak Fed Tightening?

Or further to go?

The focus has shifted in recent weeks from how far central banks are going to go in their tightening cycles to how much of an economic slowdown we are facing and if a recession is still avoidable.

There’s no easy answer to that question and while there are signs that markets are starting to price in a recession, there is no consensus. Of course, the fate of some countries looks more certain than others but in most cases, it’s far from a foregone conclusion. For this reason, the economic data over the next week, as well as the views of policymakers, could be huge in determining how markets will behave.

The bank holiday on Monday means it’s a late start for the US but the rest of the week is anything but quiet. The US jobs report and Fed minutes are the obvious standouts but there’s plenty more on top that will ensure it’s another fascinating week.

Can the Fed become more hawkish?

Another super-sized rate hike expected from the RBA

What next for the yen?


A shortened trading week on Wall Street will have traders focusing on the FOMC minutes, a few Fed speakers, and the June nonfarm payroll report. The Fed’s minutes to the last meeting will likely bolster the case for another massive rate hike as inflation remains stubbornly high.  The June nonfarm payroll report is expected to show the economy added 250,000 jobs in June, a deceleration from the 390,000 jobs added in the prior month.  The unemployment rate is expected to remain steady at 3.6% and average hourly wages might maintain the same 0.3% pace from a month ago.  

A couple of Fed hawks, Bullard and Waller will likely make the case for the Fed to be aggressive with the tightening of monetary policy.  Fed’s Williams will also speak and has recently noted that 50 or 75 bps will be the debate at the July FOMC meeting. 


I don’t think there’s any such thing as a quiet week for Europe at the moment but next week is probably as close as it gets. The bulk of the week is made up of tier two and three data like final services PMIs which are typically not subject to large revisions. 

The ECB meeting accounts will naturally be of interest although I’m not sure what we’ll get from them considering how explicit the central bank has been in its intentions. What’s happened since has probably been more significant as it could influence how aggressive they’ll be with the lift-off in a few weeks. For this reason, comments from President Lagarde and her colleagues will be more significant.


A light week on the data front, with the highlight being the final services PMI on Tuesday. But there are a number of BoE policymakers appearing next week including Governor Bailey on Tuesday, with traders keen to know if the MPC will finally join the super-sized club or continue with the slow and steady approach.


Inflation and PMI data next week, with the former of particular note. That said, the central bank has made clear its intention to continue cutting rates as inflation falls. The Key Rate has already fallen back to 9.5% from 20% where it was hiked to after the invasion. But further cuts could follow in an attempt to support the economy and offset the strength of the rouble.

South Africa

The whole economy PMI on Tuesday is the only notable release next week. 


Restrictions on lira lending last week had the desired effect on the currency, seeing the USDTRY fall more than 8% over the next couple of days before pulling back. It’s now only 3.5% from the highs, suggesting the government has more to do. A 25% increase in the minimum wage announced on Friday will neither tame inflation nor make people’s lives dramatically easier. Further pain ahead. CPI data on Monday is expected to show annual inflation jumped to 78.35% in June from 73.5% in May.


Inflation data on Monday could support the argument for further rate hikes from the SNB. They do love to spring a surprise on the markets, in contrast to every other central bank, so we can’t ignore the possibility of an inter-meeting decision, even if it appears unlikely at the moment. 


China continues to have relatively low inflation, in sharp contrast to skyrocketing inflation in most major economies. The June inflation report will be released on Friday. The estimate stands at 2.2% YoY, a notch higher than the 2.1% gain in May. The modest inflationary pressures have allowed the PBOC to continue to inject more stimulus into the economy in order to boost growth.


Services PMI is the only release of note next week. 


The RBA holds its policy meeting on Tuesday. In June, the RBA raised rates by 0.50%, surprising the markets which had expected a much smaller increase. Still, with the cash rate currently below 1%, the central bank will have to press the rate pedal to the floor in order to curb soaring inflation. Another 0.50% increase is widely expected at the upcoming meeting, which would bring the cash rate to 1.35%.  

New Zealand

It’s a quiet week out of New Zealand, with Wednesday’s Reserve Bank of New Zealand Statement of Intent the only tier-1 event. The RBNZ will present its objectives for the next three years and the markets will be looking for insights into the Bank’s future rate policy. The cash rate is currently at 2.0% and the Bank is expected to raise rates when it meets on July 13th.


Japan releases household spending on Friday. Japan’s inflation of 2.1% has been much more moderate than in the UK or the US, where inflation is close to double digits. Still, consumers are not used to prices rising, after 15 years of very low inflation.  A weaker yen has made imports more expensive, and the Japanese consumer is holding tighter to their purse strings. Household spending is expected to decline by 0.9% in May, after a decline of 1.7% in April.


Singapore releases retail sales on Tuesday. The May release came in at 12.1% YoY, pointing to a sharp gain in consumer spending.

Economic Calendar

Saturday, July 2

Economic Events

ECB’s Schnabel speaks on the world economy, monetary policy and the Russia-Ukraine war

Sunday, July 3

Economic Events

German Chancellor Scholz gives a traditional “summer interview” on ARD TV

Monday, July 4

Economic Data/Events

US markets closed for Independence Day

Turkey CPI 

Switzerland CPI

Australia building approvals, inflation gauge, home loans value

Canada Manufacturing PMI

Euro area PPI

Germany trade

Japan monetary base

Singapore electronics sector index, PMI

Spain unemployment

The Ukraine Recovery Conference occurs in Switzerland

Tuesday, July 5

Economic Data/Events

US factory orders, durable goods

Thailand CPI 

European PMIs: Eurozone, France, Russia

Australia PMI

RBA rate decision: Expected to raise rates by 50bps to 1.35%

India PMI

Singapore PMI

South Africa PMI

China Caixin PMIs

France industrial production

Japan labor cash earnings, PMI

Mexico international reserves

New Zealand commodity prices, house prices

Singapore retail sales

BOE releases financial stability report

Wednesday, July 6

Economic Data/Events

US PMIs, ISM services index, JOLTS job openings, FOMC minutes

Euro area retail sales

Germany factory orders

Spain industrial production

UK PM Johnson appears before Parliament’s Liaison Committee

UN posts annual “The State of Food Security and Nutrition in the World” report.

ECB’s Rehn speaks on a panel on Finnish foreign policy and security

BOE Chief Economist Pill delivers the keynote speech on the second day of the Qatar Centre for Global Banking & Finance’s annual conference in London

BOE Deputy Governor Cunliffe speaks on a panel about central bank digital currency

Thursday, July 7

Economic Data/Events

US ADP employment change, initial jobless claims, trade

G20 foreign ministers meet in Bali

Fed’s Waller speaks at National Association for Business Economics event

Fed’s Bullard speaks at an event hosted by Little Rock Regional Chamber

BOE releases its decision maker survey.

ECB publishes accounts of its June policy meeting.

ECB’s Stournaras, Centeno and Herodotou speak at the Annual Economist Government Roundtable in Athens

BOE’s Mann speaks at the LC-MA Forum on current monetary-policy issues

Mexico CPI

China foreign reserves 

Australia Foreign reserves, trade

Singapore foreign reserves

Germany industrial production 

Poland rate decision: Expected to raise rates by 75bps to 6.75%

Canada trade 

Switzerland unemployment rate

Chile copper exports

Hungary one-week deposit rate

Japan leading index

Mexico releases monetary policy minutes

Russia foreign exchange, gold reserves

Thailand consumer confidence

EIA crude oil inventory report

Friday, July 8

Economic Data/Events

US nonfarm payrolls, unemployment, wholesale inventories, consumer credit

Fed’s Williams speaks at an event hosted by the University of Puerto Rico

ECB’s Lagarde, Schnabel, Villeroy and Stournaras speak at The French Davos, Recontres Econmiques forum

ECB posts climate-risk stress test results for European banks

Russia CPI 

Italy industrial production 

France trade 

Canada unemployment

Japan household spending, BoP, trade balance, bank lending, bankruptcies

New Zealand heavy traffic index

Thailand forward contracts, foreign reserves

Turkey current account

Sovereign Rating Updates

Greece (Fitch)

Turkey (Fitch)

EFSF (Fitch)

ESM (Fitch)

Netherlands (DBRS) 

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.