What to Watch Across Markets This Week: July 8, 2024

• U.S. jobs data shows a gradual decline
• U.S. unemployment rate surpasses the 4.0% mark
• French vote leads to uncertain future with hung parliament
• Inflation data dominates releases in both the U.S. and China

Key Events from Last Week

The U.S.

The June Non-Farm Employment Change report showed a decrease from 218K to 206K, falling below the previous month's figure. Despite this decline, the result surpassed expectations. However, it indicates a downward trend compared to recent data, which is why the Dollar’s value declined.

In addition to the downward pressure on the U.S. Dollar, the release of the U.S. unemployment rate, which has climbed to 4.1%, its highest level since December 2021, suggests further weakening in the labor market. This development could signify broader economic shifts, potentially increasing pressure on the Fed to contemplate rate cuts.

French Election Results

The French elections on July 7, 2024, led to an uncertain future with a hung parliament, causing the Euro to slip. A group of left-wing parties won the most seats but didn't secure a majority, preventing a major far-right win. However, no party has clear control. This situation could lead to political gridlock, impacting France's economy and global issues.

Upcoming News This Week

This week, inflation has seized the spotlight in both the U.S. and China, commanding attention across global markets. Let's delve into the potential implications and developments ahead.

The U.S. 

On Thursday, July 9, 2024, the Consumer Price Index (CPI) y/y will be released at 4:30 PM, GMT+4 (Dubai Time). The market anticipates a decrease from a previous 3.3% to an expected 3.1%, suggesting a potential easing of inflationary pressures. If realized, this could increase expectations for two rate cuts by December, potentially exerting downward pressure on the value of the U.S. Dollar, according to analysts' assessments.

On the other hand, on Friday, July 12, 2024, at 4:30 PM GMT+4 (Dubai Time), the Producer Price Index (PPI) m/m will be released. Market expectations foresee an increase, suggesting rising inflationary pressures from the producer's standpoint. If this scenario unfolds, analysts suggest that these costs may eventually be passed on to consumers. 

China

Both the Consumer Price Index (CPI) year-over-year and the Producer Price Index (PPI) year-over-year are scheduled for release on Wednesday, July 10, 2024, at 5:30 AM GMT+4 (Dubai Time). Expectations are for both indices to rise compared to their previous figures, with CPI projected to increase from 0.3% to 0.4%, and PPI forecasted to improve from -1.4% to -0.8%, marking its highest level since February 2023.

If these expectations materialize, it could potentially bolster crude oil prices, fueled by increased economic activity, and benefit notably from China's position as one of the largest crude oil importers.