Week Ahead – Summer Remains Volatile

A strong nonfarm payroll report has paved the way for the Fed to deliver another 75 basis-point rate hike at the June 27th policy meeting. An overheating economy and hot inflation will keep the Fed focused on aggressively fighting inflation.  Recession fears eased after the June payrolls impressed and wage growth remained strong.  The Fed has the all-clear signal to hike rates aggressively and that will lead to a sharp deceleration with the economic data by the end of the summer.

The upcoming week will have a chorus of Fed speak, a couple key rate decisions, massive Chinese data, and President Biden’s trip to the Middle East.  Fed’s Williams, Barkin, Waller, and Bostic will likely provide more insight as to how aggressive the Fed may have to be over the next few policy meetings. The Bank of Canada and Reserve Bank of New Zealand each have rate decisions that are expected to deliver half-point rate increases.  China’s second quarter GDP is expected to show the economy contracted due to Shanghai’s lockdown.  President Biden’s trip to the Middle East could also weigh heavily on energy markets as he makes a push for the Gulf nations to pump more crude.

Summer doldrums are not happening anytime soon as Wall Street has yet to see the inflation peak.  Financial markets are getting close to pricing in how high the Fed will take interest rates, but volatility will remain elevated until that happens.

Will this inflation report be the peak?

China GDP to contract in Q2

Energy traders closely watching President Biden’s Mideast trip


Wall Street will pay close attention to the latest inflation report which should keep the pressure on the Fed to tighten rates aggressively.  CPI is expected to remain hot with an 8.8% annual gain in June following an 8.6% rate in the prior month.  The start of earnings season will also draw extra attention as the banks will provide their latest assessment of the US economy and the  consumer. It will be a busy week for Fed speak as Williams talks about Libor on Monday, Barkin discusses recession on Tuesday, Waller speaks on Thursday and Bostic talks on Friday.  The Fed will also release the Beige Book on Wednesday.


The Boris Johnson show has come to an end. The colorful, often irreverent prime minister has seen his popularity plummet and he resigned on Thursday after massive resignations in his Conservative party.

Johnson said he plans to remain prime minister until the fall, when a successor is named. However, given his humiliating departure, there are members of the Conservatives and the opposition who have called for his immediate replacement. The political meltdown could cause some volatility in the UK financial markets in the coming weeks.

BoE Governor Andrew Bailey will testify before the UK’s Treasury Committee on Monday. Lawmakers are sure to quiz Bailey on surging inflation and the cost-of-living crisis in the UK.

On Wednesday, the markets will get treated to a data dump. GDP is expected to remain flat but no one would be surprised if it declined by 0.1% MoM in May, following a 0.3% contraction in April. Industrial Production has also struggled, with a consensus estimate of a flat reading for May, after a -0.6% reading in April.


EU sanctions against Russia over its invasion of Ukraine have raised fears of an energy crunch in Europe come winter. The Nord Stream 1 pipeline, the primary channel for Russian gas exports to Europe, will close on Monday for two weeks for annual maintenance. However, there are fears that Moscow might not reopen the pipeline, which could send natural gas prices soaring.


On Tuesday, Germany releases ZEW Economic Sentiment. The index has been in deep-freeze for months, with a June reading of -28.0. This is expected to worsen to -40.0 in July.

We’ll get a look at German CPI on Wednesday. Inflation has been soaring in the eurozone’s largest economy, but is expected to remain unchanged in June at 7.6% YoY.

It is a heavy week for data in China but initial risks lie over the weekend with covid zero as cases rise in Shanghai. Any moves to tighten restrictions over the weekend will see China equities move sharply lower on Monday.

Over the weekend, China releases June Inflation, but unless it leaps higher to near 3.0%, its impact will be slight. Monday sees New Yuan Loans and if they fall sharply, that will undo much of the positive new for equities of China bringing forward local government infrastructure bond issuance today.

China’s Balance of Trade Wednesday should be a non-event, but Friday’s House Price Index, Retail Sales, Fixed Asset Investment, Industrial Production and most especially GDP contraction will definitely cause some volatility. An ongoing recovery from the covid zero lockdowns is priced into the data now, so the risk is that the data series underperforms. That could see short-term weakness in China equities, although longer-term, it likely brings China closer to a wider stimulus effort. That would be good for equities and commodities.


With the INR hovering near record lows versus the US Dollar, as India’s current account position deteriorates, and cost of living surges, this week’s data dump carries higher than normal risk. Additionally, India is seeing record foreigner outflows from its stock market.

India releases Industrial production and Inflation on Tuesday. IP has downside risks, Infl. upside risks which will weigh on equities and the INR. WPI index releases Thursday have upside risk as well which will have markets pricing in harder RBI rate hikes, equities negative. India’s Balance of Trade on Friday has downside risks on a weak number for both the INR and equity markets as the stagflation noise returns to the country.


The Australian Dollar is hovering just on monthly lows as global investor sentiment turns south, only a continuation of this week’s Wall Street recovery is likely to avoid further weakness.

Australia releases Business and Consumer Confidence this week, but the Employment data on Thursday is most important. It is usually good for decent intraday volatility in forex and equities. That said, the data recently for Australia has been very good, so a series of weak prints could have an outsized negative impact on the AUD and local equities, with the RBA in hawkish mode.

New Zealand

The RBNZ announces its next policy decision on Wednesday, although no statement or new projections. A 0.50% hike to 2.50% is priced into the market and 0.25% would cause a sharp selloff by the NZD. In a similar vein, 0.75% would be a huge surprise and is probably good for a 150 point NZD/USD rally.

Inflation and GDP data the following week (its only released quarterly quite incredibly) potentially risks more volatility than the RBNZ decision itself.


Japan is reeling from the Abe shooting today, but any negative impact on the Yen and Nikkei will be short-lived. Japan has Upper House elections on Sunday, which the LDP will now hold comfortably following today’s tragic incident.

Japan Machinery Orders Monday, and PPI Tuesday should move higher as Japan coattails China and its own covid recovery. Bullish equities at the periphery, however Industrial Production on Thursday has downside risks.

USD/JPY remains near 136.00 despite US yields falling the past week. Given USD/JPY’s near 100% correlation to the US/Japan rate differential, a sharp move lower by either the US 2 or 10-year yield tonight or next week risks exposing a very long USD/JPY market to aggressive downside correction, potentially targeting 132.00.


Singapore releases GDP on Thursday ,(3.70% exp YoY) and Non-Oil Exports on Friday (12.40% exp YoY). Typically they will have a very binary outcome on local stock markets. Lower number, lower Straits Times Index. Higher number, higher Straits Times Index.

The risks are rising that the MAS will announce a surprise tightening in either July or early August (before the scheduled October date), which would see a sudden rally by the Singapore Dollar as the MAS manages monastery policy via the currency.


Energy traders will have a lot to keep their eye on next week as President Biden makes a trip to the Middle East and as the Nord Stream 1 pipeline is scheduled to shut for maintenance.  Both the oil and natural gas markets could remain very tight and fears are rising that Russia may signal they might not reopen the key natural gas channel for Europe.

Recession fears will continue to weigh on the crude demand outlook, but the oil market is still looking tight given the supply risks from a wide range of suppliers to Europe.


Gold’s plunge may not be over if the short-end of the Treasury curve continues to rise.  The gold market has been beaten up and the pain won’t end until most of Wall Street is confident in pricing in Fed tightening.


Bitcoin’s best week since March will either be a dead cat bounce or possibly the beginning of a stabilization period.  Selling exhaustion may have settled in but until the fundamentals remotely improve for Bitcoin skepticism with any rebound will remain elevated.

Saturday, July 9

Economic Data/Events:

  • China aggregate financing, money supply, new yuan loans
  • ECB’s Schnabel speaks on a central banking and “greening of the economy” panel
  • China’s two-day online Caixin Summer Summit begins

Sunday, July 10

Economic Events:

  • ECB’s Stournaras speaks on a multilateralism panel at the Recontres Economiques
  • Japan holds elections for the upper house of parliament. PM Kishida’s ruling coalition is expected to win a majority according to polls.

Monday, July 11

Economic Data/Events:

  • China FDI
  • Denmark CPI
  • Japan money stock, machinery orders
  • New Zealand card spending
  • Norway CPI
  • Fed’s Williams speaks on Libor at a conference co-hosted by the New York Fed and the UK Financial Conduct Authority.
  • BOE Gov Bailey appears before the UK’s Treasury Committee.
  • CFS-IMFS special lecture by Bundesbank President Nagel on “Digital Euro — Chances and Risks.”
  • BOJ Gov Kuroda speaks at a branch managers’ meeting.
  • Sweden’s Riksbank publishes minutes from its June 29 meeting.
  • Nord Stream 1 gas pipeline closes for annual maintenance through July 21.

Tuesday, July 12

Economic Data/Events:

  • Australia household spending, business confidence
  • Germany ZEW survey expectations
  • India industrial production, CPI
  • Japan PPI
  • Mexico international reserves, industrial production
  • New Zealand net migration
  • South Africa manufacturing production
  • South Korea money supply
  • ECB’s Villeroy speaks at Europlace International Financial Forum in Paris.
  • BOE Gov Bailey discusses the economic landscape at an OMFIF event in London.
  • US Treasury Secretary Janet Yellen attends events in Tokyo

Wednesday, July 13

Economic Data/Events:

  • US CPI
  • President Biden begins 4-day trip to Middle East
  • Fed releases Beige Book
  • Germany, Spain, France CPI
  • Australia consumer confidence
  • Canada (BOC) rate decision: Expected to raise rates by 50bps to 2.00%
  • BOC releases quarterly monetary policy report and Gov Macklem holds post-rate decision conference
  • China trade, medium-term lending
  • Eurozone industrial production
  • New Zealand food prices, home sales
  • RBNZ rate decision: Expected to raise rates by 50bps to 2.50%
  • BOJ to announce outright purchase amount of government securities
  • South Africa retail sales
  • UK industrial production, monthly GDP
  • EIA Crude Oil Inventory Report

Thursday, July 14

Economic Data/Events:

  • Earnings Season begins with JPMorgan and Morgan Stanley
  • US PPI, Initial Jobless Claims
  • Australia unemployment, consumer inflation expectations
  • India trade, wholesale prices
  • Japan industrial production, capacity utilization
  • Kazakhstan retail trade
  • Philippines overseas remittances
  • Singapore GDP
  • Sweden CPI, unemployment rate
  • Turkey industrial production
  • UK RICS house prices
  • ECB’s Centeno speaks at a parliamentary hearing in Lisbon.
  • Hungary’s central bank Deputy Governor Virag speaks at an online book presentation.

Friday, July 15

Economic Data/Events:

  • US business inventories, industrial production, University of Michigan consumer sentiment, Empire manufacturing, retail sales
  • Fed’s Bostic speaks
  • China GDP, Industrial Production, Retail Sales, Surveyed Jobless Rate, Fixed Assets, liquidity operations
  • Poland GDP
  • Canada existing home sales
  • Eurozone new car registrations
  • Japan tertiary index, department store sales
  • New Zealand PMI
  • South Korea export and import price index
  • Thailand forward contracts, foreign reserves
  • G20 finance ministers and central bankers meet
  • ECB’s Rehn speaks on the economy and inflation at the SuomiAreena 2022 in Pori, Finland.
  • Bank of Italy releases its quarterly economic bulletin.

Sovereign Rating Updates:

– Spain (Moody’s)

– Ireland (DBRS)

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.