Failed analyst expectations in estimating the gross domestic product (GDP) in the USA, coupled with a stronger increase in EU consumer prices, caused disillusionment among investors in the past trading week. Despite an increasing deterioration in the economic situation in the USA and persistently high inflation in the euro zone, neither the classic stock indices nor the key crypto currency BTC slipped to new lows. Whether this is just a temporary breather or whether the financial market is expanding its correction will largely depend on fresh key figures from the economy this week.
Figures on the purchasing managers’ indices in the euro area
The Purchasing Managers’ Indices (PMI) for the euro zone will be published from 10:00 a.m. (CET) in the morning. The composite Purchasing Managers’ Index (PMI) for both manufacturing and non-manufacturing reflects the state of the eurozone’s manufacturing and services sectors. The index consists of information on business, employment, order, inventory and price trends in the manufacturing and service sectors. The index is based on a survey of 300 purchasing managers and company bosses and is considered one of the most influential economic indicators among investors. Expectations for the month of June stand at 51.9 after reading 54.0 for the previous month. A falling reading indicates contracting economic activity in the euro zone and increases the likelihood of a euro zone recession.
Purchasing managers’ indices in the USA and FOMC meeting
On Wednesday, July 6th at 16:00 (CET) the ISM Purchasing Managers’ Index (PMI) for the service sector will be published first. The Institute for Supply Management presents the results of the monthly survey of 370 purchasing managers and company bosses from 62 industries. The experts’ forecast for the month of June is 54.3, after 55.9 in the previous month. Falling PMI numbers are mostly negative for the US dollar and could be supportive for BTC price.
Also at 4:00 p.m. (CET) the Bureau of Labor Statistics publishes the JOLTs vacancies. Market analysts forecast 11 million vacancies. In the previous month, the number of job vacancies in the US was 11.4 million. A declining number of job vacancies indicates an economic slowdown, further increasing the tendency for the downturn and the likelihood of a recession.
At 8:00 p.m. (CET), the FOMC meeting minutes of the US Federal Reserve for the last central bank meeting in June will then be published. Investors hope for further relevant information on the economic situation and the future monetary policy of the Fed. Increased volatility on the financial markets is therefore to be expected in the evening.
ECB meeting minutes and fresh unemployment figures for the USA
Thursday starts with the publication of the ECB meeting minutes. At 1:30 p.m. (CET), market participants will receive more precise information on how the European Central Bank assesses the economic and monetary policy situation in the euro zone. Investors hope to be able to draw conclusions about the future monetary policy of the ECB.
At 2:30 p.m. (CET) the weekly figures for initial jobless claims in the USA will then be announced. 230,000 new initial applications are expected this week. Compared to the previous week, this estimate is 2,000 higher. Should the number of initial applications turn out to be higher than expected, this would indicate an increasing economic downturn in the USA. This negative development could lead to fiscal relief by the Fed.
Employment report at the end of the week
On the last day of the trading week, July 8th, at 14:30 (CET) the non-farm payrolls figures for the US for the month of June will be presented. Non-farm payrolls are the monthly change in the number of non-farm payrolls employed. The monthly labor market report is the most important and meaningful figure among the US economic indicators. Increasing job growth is considered an indication of an improvement in the labor market and the associated increase in consumer spending. If, on the other hand, job growth corrects, this is an important indication of increasing problems on the labor market.
Declining job growth has a negative impact on future consumer spending. The forecast for the month of June amounts to 270,000 employees. Compared to the previous month (390,000), the experts’ forecasts are already significantly lower. Weak NFP numbers often cause the US dollar to lose strength, which could have a positive effect on the BTC price. Also at 2:30 p.m. (CET) the unemployment rate in the USA will be published. As in May, the forecast is 3.6 percent. If the unemployment rate rises, this is an important indication of a deterioration in the labor market and the associated decline in consumer spending.