The beginning of September may abound in many interesting macroeconomic events with the potential to influence financial markets. Among the most important may be the meetings of central banks in the Eurozone, Australia, and Canada, as well as several speeches by Fed representatives and the final GDP readings for several major world economies.
The current week in the US may be relatively calm after last week's labor market data release, and the ISM Services PMI and trade data may be in the spotlight. Investors will also be able to keep a close eye on speeches by several Fed officials, including Federal Reserve Chairman Jerome Powell, at the 40th annual Monetary Conference, which will be held Thursday at the Cato Institute. Today, however, markets in the US are closed due to the Labor Day holiday.
Of the central bank action events, market consensus expects that the Bank of Canada may raise interest rates by 0.75 percentage points, following July's 1 percentage point hike. Meanwhile, in Europe, the European Central Bank will decide on monetary policy on Thursday, and markets expect another increase in borrowing costs by at least 50 basis points, as the eurozone struggles with unprecedented levels of inflation. Preliminary data showed that in August price growth increased more than expected to a new record level of 9.1%, which increased the chances of a large interest rate hike by 75 basis points.
Indeed, several ECB officials have recently come out in favor of a major rate hike and warned that interest rates must remain elevated for an extended period of time to curb price growth.
Investors will also be able to keep a close eye on Russian gas supplies via Nord Stream. Gazprom said Friday that the key pipeline to Europe will not reopen as planned. This may have pushed the euro below the $0.99 level, making the common currency the cheapest against the dollar in 20 years this morning.
Investors will also be able to keep an eye on Monday's OPEC+ meeting, which is expected to provide guidance on the cartel's production plan from October. Major producers are likely to keep oil production quotas unchanged, but Saudi Arabia has said the cartel could cut production if Iran reaches a nuclear deal with the West and restores exports.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service)
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