What to Watch Across Markets This Week: September 9, 2024

• NFP report missed expectations for the second time, worrying investors
• Yellen reassures the public of the U.S. economy's strength
• The Harris-Trump debate on September 10 could impact the dollar
• U.S. inflation shows continued easing
• ECB expected to cut rates as inflation nears target

Last Week's Market Recap

On Friday, September 6, 2024, the job report (NFP) fell short of expectations for the second consecutive time, raising investor concerns.However, Treasury Secretary Janet Yellen reassured the public that the U.S. economy is still strong. She explained that while hiring has slowed, there aren’t major layoffs happening, and the economy is still recovering well. She tried to ease fears of a recession, saying that the economy is on track for a “soft landing,” where inflation is being controlled without triggering a major downturn. The Federal Reserve is expected to lower interest rates soon to be able to keep the economy steady.

Upcoming this Week

The U.S.

Presidential Debate

As per analyst analysis, the U.S. presidential debate between Kamala Harris and Donald Trump on Tuesday, September 10, 2024, could have a big impact on the dollar. After Joe Biden's poor, performance in the last debate, Trump gained support and the dollar strengthened. If Trump wins, the dollar is likely to rise because of expectations of more government spending and tighter monetary policies, as per analyst analysis. On the other hand, if Harris wins, the dollar may weaken due to tighter government spending and looser monetary policies, as per analyst analysis.

Inflation Data

With the CPI m/m expected to hold steady at 0.2%, showing no increase in monthly inflation, and the CPI y/y forecasted to drop from 2.9% to 2.6%, it suggests a continued easing of inflation pressures over the year. Since the beginning of the year, CPI y/y has been gradually decreasing, signaling reduced inflationary pressures. If this trend continues, it could add more pressure on the Federal Reserve to cut interest rates during the upcoming Federal Funds rate decision, on Wednesday, September 18, 2024, at 10:00 PM GMT+4 (Dubai Time), as per analyst analysis.

Europe

ECB Set to Cut Rates

On Thursday, September 12, 2024, at 4:15 PM GMT+4 (Dubai Time), the European Central Bank (ECB) is expected to announce its Main Refinancing Rate. Markets anticipate a rate cut from 4.25% to 3.65%. With inflation nearing the ECB's 2.0% target, a 25-basis point reduction is widely expected this week, as per analyst analysis, with a potential additional 25 basis point cut at December's meeting. In total, markets are forecasting a 63-basis point reduction by the end of the year.

Conclusion

In summary, last week's job report fell short of expectations, raising investor concerns, but Treasury Secretary Janet Yellen reassured the public that the U.S. economy remains strong. Key events this week include the U.S. presidential debate, which could significantly impact the dollar, and inflation data that may influence the Federal Reserve's upcoming rate decision. In Europe, the ECB is expected to cut rates to ease inflationary pressures. Stay tuned for our next market outlook report next week to stay updated on these developments.