The week begins with the release of flash manufacturing and services PMIs for the eurozone, the United Kingdom, and the United States. In Japan, the BoJ core CPI y/y figures will be revealed, while Canada prepares to publish its inflation data.

Fed Chair Powell is set to testify on the Semiannual Monetary Policy Report in Congress, with key appearances scheduled on Tuesday and Wednesday. Australia’s inflation data will also be published on Wednesday.

US Economic Data Release

In the U.S., Thursday will see the release of final GDP q/q, weekly unemployment claims, and durable goods orders m/m. Japan will reveal the Tokyo core CPI y/y on Friday, Canada will report GDP m/m, and the U.S. will publish core monthly PCE price index data along with personal income and spending figures.

Canada anticipates a 0.5% CPI m/m, up from a prior -0.1%, and expects headline inflation to remain subdued at 1.7%. Australia’s CPI y/y is predicted to drop to 2.3%. The U.S. expects small changes in core durable goods orders and a rebound in total orders due to a surge in aircraft demand.

Japan’s Tokyo core CPI y/y is expected to fall slightly, with government measures easing some price pressures. Its labour market remains strong, and retail sales might see gains bolstered by subsidies.

In the U.S., the core PCE price index m/m is forecast to remain at 0.1%, with personal income and spending m/m also expected to hold steady. While consumer activity shows some softening, overall consumption remains above pre-pandemic levels, and income growth maintains support, partly due to social security revisions.

This week opens with fresh data intended to shed light on industrial and service-sector performance across key economies. Those initial PMI readings provide an early snapshot of business conditions, often used to anticipate shifts in wider economic trajectories before official figures catch up. These include purchasing manager sentiment from the eurozone, the UK, and the U.S., often acting as lead indicators of upcoming production or demand changes. When PMIs move above or below the 50-mark, expansions or contractions are implied; subtle shifts around those lines now require close attention, as they can pre-empt abrupt reassessments in rate path expectations.

Canada’s Inflation and Economic Outlook

Elsewhere, Canada’s inflation outlook appears relatively contained. Headline consumer prices are forecast to tick slightly higher month-on-month but still run well below central bank targets year-on-year. Given such muted price pressures, policy action will likely hinge more on domestic growth trends and employment resilience. If GDP figures show ongoing sluggishness or signs of household strain, the path to policy recalibration may shorten.

In Australia, an easing in year-on-year inflation might strengthen the case for rates to be held steady, especially with underlying pressures showing fewer signs of persistence. We’ve noted that prior months saw supply-side drivers fade, and the latest data will clarify whether that disinflation continues or stalls. Traders prepared to adjust exposure quickly may find short-term repricing opportunities should the inflation surprise markedly lower.

Meanwhile, Powell faces back-to-back appearances before Congress, which typically opens the door for detailed remarks on economic conditions, risks, and future policy leanings. Though official language often reflects the Fed’s mandate-driven tone, tone shifts or pointed Q&A responses can adjust market rate expectations within hours. We often see traders recalibrating rate cut odds around these events—especially when upcoming data releases remain limited—so staying nimble through the end of Wednesday is warranted.

Durable goods figures and revised GDP numbers land later in the week in the U.S., but much of the buzz may centre on aircraft order data, which can heavily skew the headline print. It’s therefore worth focusing instead on non-transport categories. If core orders stagnate or soften, it may indicate hesitance from firms to spend on long-term investments, which could influence sentiment around forward-looking growth.

Japan’s inflation data, especially from the Tokyo region, will offer early signals. Core CPI there is expected to retreat slightly as previous government moves cool price pressures. That said, strong wage growth and a resilient labour market continue to support spending, and upcoming retail figures may reflect this strength. If retail activity remains buoyant, the case for delayed policy normalisation grows. There, the focus is less on inflation targets and more on how sustainable domestic demand appears amid global headwinds.

Stateside, core PCE remains a key marker for monetary policy, more so than CPI in practice. The market expects no change this month. Should income and spending confirm expectations, we may see little immediate shift in policy views. However, any upward deviation in PCE—as even a 0.2% print could affect market direction—should not be dismissed. Social security adjustments continue to prop up consumer purchasing power, and the Fed will monitor how persistently this translates into upward price pressure.

Throughout the week, forward-looking data holds more weight than backward revisions. While consumption levels remain elevated, even slight indications of softening, particularly in discretionary spending categories, may prompt a reassessment of interest rate resilience. For those managing exposure, this is a week best watched with an eye towards second-derivative trends—rate of change matters more than level.

A steady hand on position sizing and tolerance for short bursts of volatility may prove more effective than high conviction directional bets. Reaction functions of central banks are finely balanced at this stage, leaving very little room for poor entry timing.

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