Bank of England and NFP next week

29.07.2022 15:41|Conotoxia Ltd Analyst Team

The first week of August will be full of interesting macroeconomic events, led by the Bank of England's interest rate decision and data from the US labor market, or NFP.

Following another interest rate hike by the Fed in the past week and the second quarter GDP data, investors' attention may turn to the labor market. Some people seem to think that it is impossible to talk about a full-blown recession in the economy when the labor market remains strong. We also hear about such a market in statements by Fed officials, so next week's reading of employment change in non-farm sectors will be able to confirm or deny this. The latest data shows that for every unemployed American, there are still two job vacancies, and small businesses can't wait for workers. With unemployment at 3.6 percent, wages growing at about 5 percent year-on-year and inflation just below 10 percent, the Fed is likely to continue raising interest rates for now. However, business surveys, such as next week's ISM report, may show that the economy is slowing down rather quickly and the Fed will tighten policy more moderately in the coming months. Here it should be mentioned that a lot can still happen, as there are still two labor market reports, two inflation readings and the annual symposium in Jackson Hole left before the FOMC meeting on September 21.

The other interesting event of the week may be the BoE's decision on interest rates. The Bank of England is likely to hike rates by 50 bps next week, which will be the first such move in this cycle. Earlier, in June, the Committee opted for a 25bp hike. Even then, however, policymakers hinted that they might act with full force to bring inflation down. Nevertheless, the key will be the approach to further possible increases. Here, in turn, the space may be getting smaller. This is likely to be visible in the Bank of England's new forecasts, which may show that inflation will be below the target in 2024/25.


Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service)

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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