The market continued to show volatility with global stock indices trading sharply higher the first half of the week then pulling back the second half, consolidating to then finish the week with some gains. Crude oil traded mostly range bound for the week, despite lower demand forecast from the Energy Information Administration (EIA) and a bearish warning from Goldman Sachs commodity analyst Jeffrey Currie. Gold broke down from a minor key level while copper finished the week strong.

In the week ahead we have the long awaited policy meeting from the Fed that is sure to have implications across the global financial markets. An unexpected drop in the jobless rate to 5.1% and an upward revision in second-quarter growth to 3.7% suggests support for a rate hike as the labor market tightens and utilization is at its best level since the global financial crisis. However the market has priced in around a 24% chance of a rate hike as inflation remains weak, emerging markets struggle and fears of a hard landing from China, the second largest economy in the world. Therefore a rate hike should shock the markets, potentially sending the US dollar sharply higher. Global stock markets should also see a spike in volatility.

We face a busy economic calendar with the Bank of Japan’s monetary policy decision and press conference on Tuesday then on Wednesday we have jobs data from UK and the US CPI number will also be published. In the week ahead I will also pay attention to the non-risk assets including the grains and natural gas. Wheat and corn spiked higher on Friday following data, potentially setting up for trading opportunities.

 – Joe Rios

Scheduled economic releases that may have an impact on the markets:

Monday

9:30 PM            AUD     Monetary Policy Meeting Minutes

Tentative           JPY      Monetary Policy Statement

Tuesday

Tentative           JPY      BOJ Press Conference

4:30 AM            GBP     CPI

5:00 AM            EUR     German ZEW Economic Sentiment

8:30 AM            USD     Core Retail Sales

Tentative           NZD     Current  Account

Wednesday

4:30 AM            GBP     Claimant Count Change

8:30 AM            CAD     Manufacturing Sales

8:30 AM            USD     Core CPI

10:30 AM          CL        Crude Oil Inventories

6:45 PM            NZD     GDP

Thursday

2:35 AM            JPY      BOJ Gov. Kuroda speaks

3:30 AM            CHF      SNB Monetary Policy Assessment

4:30 AM            GBP     Retail Sales

8:30 AM            USD     Unemployment Claims

10:00 AM          USD     Philly Fed Manufacturing Index

10:30 AM          NG       Natural Gas Storage

2:00 PM            USD     FOMC Statement

2:30 PM            USD     FOMC Press Conference

Friday

8:30 AM            CAD     Core CPI