As we approach the end of August, global investors are eagerly awaiting the start of a long-awaited Federal Reserve easing cycle. Asia shares are on the rise, the dollar is on track for its worst monthly performance since last November, and U.S. stock futures are extending their positive run.
The sell-off that occurred on Aug. 5 has faded into the past, and markets have regained stability. As we head into September, European markets will be busy with key economic data releases, including UK house prices, German retail sales, unemployment, and import prices, as well as French producer and consumer prices.
The euro zone inflation figures are expected to show a slowdown in consumer prices, which could put pressure on the European Central Bank (ECB) to consider easing monetary policy. With the Fed likely to start lowering rates soon, the ECB may have little choice but to follow suit.
In the U.S., all eyes are on the core personal consumption expenditures (PCE) price index release, which will provide insight into inflation trends. Next week's nonfarm payrolls report will also be crucial in determining the Fed's future rate decisions.
Meanwhile, in Asia, core inflation in Tokyo is on the rise, potentially paving the way for the Bank of Japan (BOJ) to hike rates in the near future.
Key economic developments to watch for on Friday include data on Germany retail sales, import prices, and unemployment rate, as well as France and euro zone CPI figures. Additionally, the US PCE price index for July will be released later in the day.
Overall, as central banks around the world consider monetary policy adjustments, global markets are bracing for potential rate cuts and their implications on economic growth and financial stability.