This week presents significant opportunities for market movement, driven by a combination of economic data, central bank guidance, and geopolitical developments. Traders should be prepared for potential volatility, especially early in the week.

Recap of Last Week:

• Stronger-than-expected US inflation data surprised markets, leading to a stronger dollar and higher Treasury yields.
• The Federal Reserve’s hawkish stance on rate cuts softened slightly.
• The European Central Bank maintained its dovish tone, hinting at potential future rate cuts.
• The Bank of Canada and Reserve Bank of New Zealand held rates steady.

Looking Ahead:

• Monday: Brace for volatile markets as investors react to weekend news of escalating tensions in the Middle East. Key US data releases include retail sales and the Empire State Manufacturing Index.
• Tuesday: The busiest day, with Chinese industrial production data, UK employment figures, and Canadian inflation numbers in focus. Additionally, central bank heavyweights like the Fed Chair and the Governors of the Bank of England and Bank of Canada will be speaking.
• Wednesday: New Zealand’s inflation data kicks things off, followed by UK inflation figures and further central bank speeches from the Bank of England Governor and Fed members.
• Thursday: A quieter day with Australian employment data and US jobless claims and Philly Fed Manufacturing Index releases.
• Friday: The week wraps up with UK retail sales data and speeches from MPC members.

Key Data Points to Watch:

• UK: Wage/employment data (Tuesday), CPI inflation (Wednesday), retail sales (Friday)
• US: Retail sales (Monday), manufacturing data (Monday & Thursday)
• Canada: CPI inflation (Tuesday)
• China: Industrial production (Tuesday)
• Australia: Employment data (Thursday)

Geopolitical Risk:

Rising tensions in the Middle East are expected to impact risk assets, leading to increased volatility.