Weekly market outlook for February 2-6

The upcoming week is set to be a busy one in the financial markets, with a range of key economic data releases and monetary policy announcements scheduled. On Monday, attention will be on the manufacturing PMI releases for the Eurozone, the U.K., and the U.S. Tuesday will see the focus shift to Australia with the Reserve Bank of Australia’s (RBA) monetary policy announcement, as well as labor market data from New Zealand and the U.S. Wednesday brings inflation data from the Eurozone and key employment figures from the U.S.

One of the most anticipated events of the week is the monetary policy announcements from both the Bank of England (BoE) in the U.K. and the European Central Bank (ECB) in the euro area on Thursday. This will be followed by the release of weekly unemployment claims in the U.S. Friday will wrap up the week with crucial labor market data from Canada and the U.S., including non-farm employment change, average hourly earnings, and inflation expectations.

In the U.S., the ISM manufacturing PMI is expected to show some improvement, with recent strength in durable goods indicating a potential rebound in business investment. However, the overall outlook for the manufacturing sector remains subdued, with persistent challenges ahead. The RBA is forecasted to raise rates by 25 basis points, driven by above-target inflation and signs of strong consumer demand and a stable labor market.

In New Zealand, employment growth is expected to continue, but at a more modest pace, with wage growth pressures remaining subdued due to spare capacity in the labor market. The services sector in the U.S. is expected to hold steady, while the U.K.’s BoE may signal a rate cut for the March meeting despite recent improvements in economic activity and inflation dynamics.

The ECB is anticipated to keep its deposit rate unchanged, reflecting ongoing economic resilience in the Eurozone. In Canada, employment change is projected to rise only modestly, with slower population growth affecting the pace of job creation. Despite mixed forward-looking indicators, a gradual recovery in hiring is expected, supported by a stabilizing external environment and domestic demand.

Looking ahead in the U.S., average hourly earnings are forecasted to increase slightly, while non-farm payrolls are expected to rise, driven by fewer seasonal layoffs. However, wage growth is expected to moderate, with potential downside risks to the unemployment rate. Overall, the week ahead promises to be eventful, with a mix of economic data and central bank decisions shaping market sentiment and direction.