Week Ahead – Fed and Earnings Eyed

Major week for US markets

All eyes on the US next week as the Fed meets and we head into peak earnings season. The central bank will discuss its exit strategy from emergency era stimulus and investors will be looking for any hints on the timing and execution.

Earnings season is off to a very strong start and it will step up a notch next week with a number of big tech companies reporting. There’ll also be a raft of economic releases which will grab the attention of investors.

Europe also offers a wide range of economic data which, coming shortly after the ECB announced a tweak to its mandate, will be very closely monitored.

Huge week on Wall Street

Data key after ECB tweak

Rupee in focus amid fears over third wave



This will be a huge week on Wall Street as the Fed will be providing some clarity over taper timing and how they will reduce asset purchases, monster earnings from big-tech, and the first look at second quarter GDP, personal consumption, and core PCE, the Fed’s preferred inflation index.  Financial markets are waiting to see if the latest global growth concerns will be enough reason for the Fed to hold off on discussing potential strategies for tapering their monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities. 

This is peak earnings season and many traders will closely watch to see if mega-cap stocks, Apple, Alphabet, Facebook, Microsoft, and Amazon can crush second quarter expectations and signal the growth story is not moderating too quickly. 

US economic growth is expected to accelerate from 6.4% to 8.4%, with a wide consensus range from 6.0% to 11.9%.  Economists are upbeat for a robust summer of economic activity given every American who is eligible to get vaccinated has had an opportunity to do so.  Pent up consumer demand, reopening of businesses, and lots of cash to spend suggests we could see some upside surprises.  

It is crunch time for infrastructure negotiations and while Democrats are pushing to get a vote done early next week, we could see some Republican resistance brew over the weekend.  


The ECB is in no rush to pare back it’s package of measures aimed at lifting inflation to its new target of 2%. At the meeting on Thursday, the central bank made clear that it is committed to the new target, following the strategy review, and that it would briefly tolerate a slight overshoot in order to achieve it.

While all of this sounds encouraging, it’s worth remembering that this is the same central bank that has seriously struggled to even come close to its old target of below but close to 2%. With that in mind, barring a dramatic shift in its policy response in the upcoming meetings, it doesn’t really feel like an enormous amount has changed.

A broad selection of data from the euro area next week, with the big hitters coming on Friday in the shape of the flash CPI numbers, GDP and unemployment.


With restrictions fully lifted, Prime Minister Boris Johnson will be hoping for a bumper summer for the UK economy after an extremely challenging 16 months. But with no restrictions comes high Covid case loads and the UK is seeing a severe surge which preceded Freedom Day. 

At this stage, that’s only coming with a modest increase in hospitalisations and a much lower number of fatalities compared with previous surges. The next couple of weeks will be a huge test of whether the country is ready for a life with no restrictions.

Emerging Markets


The central bank raised interest rates by 100 basis points to 6.5% on Friday, in line with expectations. The currency was relatively stable as a result.

Next week sees the release of retail sales and unemployment data on Wednesday.

South Africa

The South African Reserve Bank kept interest rates unchanged at 3.50%, as expected this week. The central bank pushed back expectations for a rate hike until later in the year, although some think it may not come until 2022.

Next week brings a selection of tier two and three data releases including PPI and trade balance.

Asia Pacific


China markets have been immune to the delta-variant volatility sweeping the world this week and are likely to remain so next week with Industrial Profits on Tuesday, the week’s only major data release. Official and Caixin PMI are released next weekend meaning the first day of August should see some volatility.

Most volatility will be driven by the China government and its official crackdown on big-tech China. Officials are allegedly preparing major penalties on Didi Global Inc. Meanwhile, debt worries continue to escalate in the property developer sector, led by Evergrande whose stock and bond endured a torrid week. Most of this volatility will be reflected in Hong Kong where the major tech and property companies from the Mainland are listed.

A default by a major developer next week, or gruesome penalties for Didi, could send Hong Kong markets sharply lower.


India’s COVID-19 cases were appearing to be on the right track but a recent increase in cases has many worried that a third wave could be coming.  The Rupee has recovered some recent losses this past week although the rapid recovery in oil prices means importers will need to keep buying US Dollars as India demand recovers, pressuring the currency.

No significant data this week, with India and ASEAN currencies to be dominated by their internal trajectories of the delta-variant Covid-19. The Rupee remains vulnerable to more US Dollar strength.

Australia & New Zealand

Australian stock markets are trading sideways, with nearly half the country now under some sort of movement restrictions, and the lockdown in Sydney being extended as cases continue climbing. The rapid recovery in overseas sentiment has balanced out the domestic risks leaving both the currency and equities treading water. The AUD, though, remains especially vulnerable to a sudden sharp deterioration in risk sentiment, especially in Asia, where the AUD is used as a correlation trade.

Australia releases inflation data and PPI this week, but the focus is going to remain on the virus situation domestically, and sentiment internationally.

No significant data from New Zealand and no market reaction to the suspension of the Australia/New Zealand travel bubble, as this was well telegraphed already.


Japanese stocks are gyrating wildly on swings in risk sentiment internationally, reflecting the heavy presence of retail fast money inthe Japan market. We expect this volatility to continue with only PMI releases to start the week. Japan releases Unemployment, Retail Sales and Industrial Production on Friday with domestic consumption set to ease as Covid restrictions continue.

USD/JPY has dissolved into a purely US/Japan interest rate differential play for now, and we expect that to continue next week, with USD/JPY remaining in a wider 109.50 to 111.00 range.

Key Economic Events

Sunday, July 25

-US Deputy Secretary of State Sherman meets with Chinese State Councilor and Foreign Minister Wang Yi in Tianjin, China

-Russian President Putin attends the annual Navy parade in St. Petersburg.

Monday, July 26

– Iraqi Prime Minister al-Kadhimi meets US President Biden

– EU finance ministers review the implementation of the Recovery and Resilience Facility, before assessing the European Commission’s new anti-money laundering package.

Economic Data/Events

US new home sales

New Zealand trade

Japan PMI

Germany IFO business climate/expectations

Mexico Unemployment rate

Singapore industrial production

Turkey capacity utilization

Belgium business confidence

Tesla Earnings (could provide guidance on Bitcoin action)

Tuesday, July 27

– RBA Deputy Governor Debelle, speaks at an online US foreign-exchange conference.

– US Secretary of State Blinken.to meet India’s Prime Minister Modi, National Security Advisor Doval and Foreign Minister Jaishankar

– IMF releases its World Economic Outlook Update.

Economic Data/Events

Apple and Alphabet report after the close

Japan PPI services

China industrial profits

Hungary Rate decisions: Expected to raise rates 15 bps to 1.05%

U.S. durable goods, Conf. Board consumer confidence, FHFA house price index

Denmark retail sales

Sweden trade balance, household lending

Wednesday, July 28

– US Defense Secretary Austin to meet Vietnamese Minister of National Defense Phan Van Giang.

– IMF Managing Director Georgieva and Banco de México Governor León speak at the annual Michel Camdessus Central Banking Lecture.

Economic Data/Events

US FOMC rate decision: No changes to monetary policy expected; Taper deliberations to intensify

US Wholesale Inventories

Canada CPI

Australia CPI

Russia CPI

Germany Consumer confidence

France Consumer confidence

Italy Consumer confidence

Japan leading index, coincident index

Sweden Retail sales

European Bank Earnings from Deutsche Bank and Barclays

Facebook reports after the US close

EIA Crude Oil Inventory Report

Thursday, July 29

Economic Data/Events

US Q2 Advance GDP Q/Q: 8.3%e v 6.4% prior; Personal Consumption: 10.7%e v 11.4% prior; Core PCE Q/Q: 6.0%e v 2.5% prior, initial jobless claims

Eurozone economic/consumer confidence

Germany Unemployment CPI

Spain CPI

France PPI

Italy PPI

Australia import-export price indexes

Singapore Unemployment

New Zealand ANZ business confidence, activity outlook

Russia gold and forex reserves

South Africa money supply, private sector credit, PPI

U.K. mortgage approvals

Belgium GDP

Portugal retail sales

Amazon reports after the US close

Friday, July 30

Economic Data/Events

US personal income/spending, University of Michigan sentiment, Chicago PMI

Germany GDP

Eurozone GDP, Unemployment Rate, CPI

Russia Unemployment Rate

Denmark Unemployment Rate

Norway Unemployment Rate

Japan industrial production, retail sales, dept. store/supermarket sales, housing starts, jobless rate

Czech Republic GDP

France GDP, CPI

Mexico GDP

Italy GDP, CPI  

Spain GDP

Canada GDP

Poland CPI


Thailand trade, BoP current account balance, foreign reserves, forward contracts

New Zealand building permits, ANZ consumer confidence

South Korea industrial production, business survey

South Africa trade balance, budget balance

Russia retail sales, real wages

Turkey trade balance, foreign tourist arrivals

Hungary trade balance

Spain Retail sales 

Sovereign Rating Updates

– Hungary (Fitch)

– Ireland (Fitch)

– (S&P) Germany (Moody’s)

– Austria (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.