Economic events for week 31: what to expect

Monday, August 5, 2024: Eurozone Retail Sales (YoY) - 10:00 GMT

Analysts predict a 1.8% increase in Eurozone retail sales, but growing concerns about inflation and energy costs are casting a shadow over consumer spending. A miss on expectations could ignite fears of a broader economic slowdown, potentially sending the Euro into a tailspin.

Some traders may see a potential short opportunity on the Euro. If the data disappoints, it could trigger a sell-off. A short position ahead of the release with a stop-loss just above the forecast level is standard, but remember that releases don’t always react logically to the figure, and not always immediately. This is a high-risk, high-reward trade. The market's on edge, so volatility is expected. Tight stops and careful position sizings are key.

Keep an eye on other economic data releases in the run-up to Monday. Any weakness in PMI or consumer sentiment data could further fuel negative sentiment.

Tuesday, August 6, 2024: US JOLTS Job Openings - 14:00 GMT

The US labor market remains a focal point for investors. While job openings have been steadily declining, the question is whether this trend will continue. A significant drop could signal cooling wage pressures, potentially easing inflationary concerns. Conversely, a stubbornly high number of job openings might reinforce expectations of further interest rate hikes.

The US labor market has been surprisingly resilient, but cracks are starting to show. Inflation's been cooling, but it's still a concern. The Fed's aggressive tightening cycle is likely nearing its end, but the full impact is yet to be seen.

If JOLTS numbers come in weaker than expected, it could signal a turning point in the labor market. There is a potential short on USD. A weaker job market could dampen Fed tightening expectations, pushing the dollar lower. 

That’s a traditional approach to forecasting, but USD is getting pushed and pulled from every imaginable direction right now and anything can happen. Don’t expect logical reactions to the data. The Fed's commentary is a must-listen. Any hints of a dovish tilt could push the dollar down even if JOLTS data beats expectations. Conversely, a hawkish tone could support the dollar even with weaker numbers, if Powell can ignite positive sentiment.

Wednesday, August 7, 2024: UK GDP (MoM) - 09:30 GMT

A modest GDP growth of 0.3% is anticipated, but persistent inflation and the looming threat of a recession are keeping market participants on edge. A weaker-than-expected print could exacerbate the Pound's recent struggles.

Let’s be open-minded for a second. The UK economy is teetering on the edge. Brexit's hangover lingers, inflation is stubbornly high, population is out of control, and the Bank of England's rate hikes are starting to bite everyone. Any additional signs of weakness could be the straw that breaks the camel's back.

If the GDP data comes in weaker than expected, it could send the pound tumbling. This means yet another shorting possibility is surfacing. A soft GDP print could stoke recession fears, prompting traders to dump the pound.

The pound is notoriously volatile, especially around major data releases. Tight stops are a must, and don't overlever. Watch for any weakness in UK manufacturing or services PMIs in the run-up to Wednesday. Negative data points could set the stage for a disappointing GDP report.

Thursday, August 8, 2024: ECB Interest Rate Decision - 12:15 GMT

All eyes will be on the European Central Bank as it deliberates on interest rates. With inflation still above the target, pressure is mounting for another rate hike. However, growing recession fears could induce a more cautious stance.

The ECB's forward guidance and any hints about the future path of monetary policy will be dissected by investors, potentially triggering significant market volatility. To put it bluntly, the ECB is in a tight spot. Inflation is a hot potato, but economic growth is fragile. 

A rate hike is expected, but the size of the increase is the big question. A larger-than-expected hike could be hawkish for the Euro, but it could also dampen growth expectations. Conversely, a smaller hike could be dovish, weakening the Euro. 

Traders will be closely watching the announcement and press conference for clues on the ECB's future policy direction. This is a high-risk, high-reward trade. Careful position sizing and tight stops are crucial. Watch out for the ECB's press conference for any hints on future policy.

Friday, August 9, 2024: US Non-Farm Payrolls (NFP) - 13:30 GMT

The monthly employment report is the crown jewel of economic indicators. A strong NFP number, coupled with robust wage growth, could solidify expectations of a more hawkish Fed. This could bolster the US Dollar and put upward pressure on Treasury yields.

Conversely, a disappointing report could reignite recession fears, leading to a market sell-off. Wage growth is still hot, and the Fed wants to see it cool down. 

If NFP comes in hot, it could solidify expectations of further rate hikes, boosting the USD. However, a weaker-than-expected number could signal a cooling labor market, potentially weakening the dollar. Another potential short on the USD seems inevitible, but watch the wage growth numbers within the report. If wages stay elevated, it could counterbalance a softer NFP number and support the dollar.

This is a classic high-risk, high-reward trade. Volatility is expected, so tight stops are a must. The market will react to both the headline NFP number and the wage growth data, so be prepared for sudden swings.

Conclusion

Week 31 of 2024 is set to be a weighty week for global markets. A series of high-impact economic data releases, including Eurozone retail sales, US JOLTS job openings, UK GDP, ECB interest rate decision, and US Non-Farm Payrolls, will offer revealing insights into the health of major economies and the trajectory of central bank policies.

Amidst concerns about inflation, slowing growth, and tightening financial conditions, these releases could trigger significant market volatility and present both risks and opportunities. Traders should brace themselves for a potentially turbulent week and closely monitor economic data, central bank communications, and geopolitical developments to navigate the shifting market landscape.