Bring on the rate cuts by Reuters

A look at the day ahead in European and global markets from Rae Wee

Global investors can’t wait for August to be over and done with and to usher in the new month with a bang, one that is almost certain to kick off a long-awaited Federal Reserve easing cycle.

Asian shares rose on Friday and are poised for a solid end to the month, while the dollar headed for its worst monthly performance since last November after Fed policymakers last week gave the green light for a rate cut of the rate in September. 18.

US stock futures also extended Wall Street’s positive run, while European futures were mixed.

The sell-off on August 5, when fears of an impending US recession suddenly surfaced, has faded into a distant memory. Those fears have since disappeared, and order has returned to the markets.

The last trading day of the month marks a busy day for Europe, where investors will scrutinize UK house prices, a warehouse of data from Germany, from retail sales to unemployment to import prices and producer and consumer prices from France.

Eurozone inflation figures are next, which are expected to show consumer prices slowing to 2.2% annually in August from 2.6% in July.

But after Thursday’s preliminary German inflation data showed a sharper-than-expected fall for the month, the reading for the broader bloc could spring a negative surprise.

European Central Bank (ECB) policymakers were circumspect about their next move at their next meeting in September, with some wary of cutting interest rates too quickly. But traders have already fully priced in a rate cut.

If Friday’s eurozone inflation number comes in below expectations, and with the Fed expected to start cutting interest rates soon, there would be little room for the ECB to push back on market expectations of easing.

In the US, the later release of the core Personal Consumer Expenditure (PCE) price index – the Fed’s preferred measure of inflation – headlines a week that has otherwise been lacking in market movement data.

However, the bigger focus will likely be on next week’s non-farm payrolls report, given the Fed’s focus on the health and state of the US labor market.

Future employment figures will influence how much and how quickly the Fed should cut rates to prevent what Fed chief Powell warned could be an “unwelcome weakening of labor market conditions” and will determine whether the market is justified in pricing 100. basis points of relaxation this year.

In Asia, data on Friday showed core inflation in Tokyo accelerated for a fourth straight month in August, likely giving the Bank of Japan (BOJ) another reason to raise rates in the coming months.

Key developments that could influence markets on Friday:

– Germany retail sales, import prices, unemployment rate

– producer prices in France (July)

– UK house prices (August)

– France, Euro zone CPI (August)

– Unemployment rate in the euro area (July)

– US PCE Price Index (July)

(By Rae Wee; edited by Edmund Klamann)