US inflation data will be the main focus of the week as the Fed is almost expected to raise rates again. Also, Big banks begin the earnings season.

Inflation statistics

The consumer price index is anticipated to have increased at an annual pace of 3.1% in June, which would be the weakest growth since March 2021, according to data released on Wednesday. It is anticipated that core CPI, which excludes volatile food and fuel costs, would rise at an annual rate of 5%, down from 5.3% in May but still higher than the Fed's 2% objective.

The data was released after Friday's June jobs report almost guaranteed the Fed would start raising rates again later in the month.

The number of jobs created in the U.S. economy in June was at its lowest level in 2.5 years but continued high pay growth suggested that labour market conditions remained tight.

Monetary policy decisions

On Wednesday, the Bank of Canada will convene its most recent policy meeting, and economists anticipate another 25-basis point rate rise after Friday's far stronger-than-expected employment data showed that the economy is still robust.

In response to worries over ongoing inflation, the BoC increased rates last month to a 22-year high of 4.75% after having kept them unchanged since their last increase in January.

On Wednesday, the BoC will also present fresh economic projections.

Despite nine rate rises totaling 450 basis points since March of last year, the economy has remained strong.

The Reserve Bank of New Zealand, which has already ended its cycle of tightening, is expected to keep rates on hold at its most recent meeting on Wednesday.

Beginning of earnings season

After easily passing the Fed's stress tests late last month, big banks will begin disclosing second-quarter results on Friday, opening the door for them to declare dividends and share buybacks.

Major lenders have sufficient capital to withstand a severe economic downturn, according to the Fed's annual health check, but now it's time for earnings.

Analysts anticipate that JPMorgan, Citigroup, and Wells Fargo's second-quarter earnings reports on Friday will be knocked down by weak dealmaking and trading revenue, while a lack of investment-banking activity has forced banks to lay off thousands of people.

Crude Oil

On Friday, oil prices reached their highest level in nine weeks, with gains of almost 5% for the week for both Brent and U.S. WTI.

Supply issues and technical buying outweighed fears that future rate rises will stifle economic growth and negatively impact the outlook for oil demand, boosting prices.

Leading oil exporters Saudi Arabia and Russia made further output reduction announcements this week, bringing OPEC+'s overall cutbacks to approximately 5 million barrels per day (bpd), or about 5% of world oil demand.

The weakened dollar, which reached a two-week low after the positive U.S. employment data reinforced expectations for further Fed rate rises, also helped to lift oil prices.

(Sources: investing.com, reuters.com)