While central bankers assemble in Portugal for the ECB's annual meeting, inflation data from the US and the eurozone will help influence expectations for interest rates.

Eurozone inflation

Preliminary June inflation numbers will be released by the eurozone on Friday. The issue the ECB is facing is highlighted by the fact that, while the headline inflation rate is anticipated to drop, underlying inflation is predicted to edge higher.

Following the bank's most recent policy meeting, ECB President Christine Lagarde adopted a more hawkish stance than anticipated, repeating that rates would need to be raised once more to bring inflation down to the bank's 2% target and that they "will be kept at those levels for as long as necessary."

Traders are currently predicting an increase by the ECB in July and another attempt to raise rates to 4% in October.

Russian turmoil

Following a failed uprising on Saturday, investors will be watching events in Russia out of fear for the possible effects on safe-haven assets like U.S. Treasuries and on commodity prices.

Yevgeny Prigozhin, a longtime ally of Putin and the creator of the Wagner army, commanded a group of Russian mercenaries who had almost reached Moscow when they unexpectedly stopped their advance.

U.S. data

With the publication of May data for the personal consumption expenditures price index, the Fed’s favoured inflation indicator, investors will receive a fresh update on the potential future course of interest rates.

The PCE price index and core rate for the 12 months ending in April were both still running far over the Fed's 2% objective.

The central bank delayed rate rises during its June meeting but sent a warning that more hikes would follow. The inflation statistics will influence investor expectations surrounding the central bank's next rate decision in July.

Prior to that, the most recent consumer confidence survey is scheduled to be released on Tuesday. In May, the index fell to a six-month low. The index for June is anticipated to rise a little.

China PMIs

The world's second-largest economy, China, will disclose its purchasing manager indices for June on Friday. The data is anticipated to support the idea that the recovery there is stalling.

In an effort to support the economy, China lowered its major lending criteria last week, but due to worries over the housing sector, the relaxation was not as significant as anticipated.

As long as it ultimately happens, traders may use bad news as a method to pressure the government to provide additional assistance for the economy.

(Sources: investing.com, reuters.com)