Key points:

• U.S. Services Purchasing Managers Index, second-quarter GDP and inflation data will affect investors' bets on multiple Fed rate cuts in 2024.
• Eurozone services PMI may affect investor expectations for ECB September rate cut.
• Inflation and services data likely to fuel speculation about July rate hike by Bank of Japan.

Dollars

On Wednesday, July 24th, the US Private Sector Purchasing Managers' Index (PMI) data will affect buyer demand for the US dollar. The service industry contributes over 70% to the US economy.

The slowdown in the growth rate of the service industry may indicate weak economic growth in the third quarter of 2024, supporting a more dovish Federal Reserve interest rate path. However, investors should also consider input and output price trends. The service industry is the main factor leading to overall inflation. Softer input and output prices may further increase investors' bets on multiple interest rate cuts by the Federal Reserve in 2024.

On Thursday, July 25th, the US labor market and second quarter gross domestic product (GDP) data also need attention. The acceleration of economic growth may alleviate investors' concerns about a hard landing. However, the data on unemployment claims in the United States will affect market sentiment towards the path of the Federal Reserve's interest rates.

Weaker labor market conditions may affect wage growth and reduce disposable income. The decline in disposable income may suppress consumer spending and reduce demand driven inflation.

The release of the US personal income and expenditure report on July 26th (Friday) will be crucial. The lower inflation rate may intensify market speculation about the Fed's interest rate cut in July. If inflation continues to decline, the Federal Reserve may also cut interest rates again in September and December.

Starting from July 20th, the Federal Reserve will enter a closed period, so there will be no Federal Reserve speeches to pay attention to.

Euro

On Wednesday, the Eurozone Service Purchasing Managers' Index will affect the market's view on the path of the Euro/USD and European Central Bank (ECB) interest rates.

The unexpected decline in the Eurozone services PMI may support investors' bets on the September ECB rate cut. The service industry contributes over 60% of the Eurozone economy. Weaker industry activity may raise concerns about economic recession in the eurozone and support ECB interest rate cuts.

However, investors must consider other aspects, including price. The trend of higher input and output prices will lower the expectation of the European Central Bank cutting interest rates in September. The European Central Bank is more concerned with inflation than the economy.

On Thursday, German business confidence will be the focus. The weaker confidence in the German economy may increase investors' bets on the ECB's interest rate cut in September. Soft business confidence may affect job creation, wage growth, and consumer spending. The downward trend of consumer spending may suppress demand driven inflation.

Investors should pay attention to the ECB's comments. ECB President Christine Lagarde (Thursday) and Chief Economist Philip Lane (Tuesday/Wednesday) will deliver speeches. On Friday, the ECB will also release its consumer expectations survey. Consumers' perception of inflation may be crucial.

Pound Sterling

UK Service Purchasing Managers' Index released on Wednesday may affect the path of the pound and the Bank of England interest rates.

The service industry contributes over 70% to the UK economy. In addition, the service industry remains the main factor contributing to overall inflation. The rebound in service industry activity may weaken investors' hopes for the Bank of England's interest rate cut in August.

However, investors should consider input and output price trends. Higher input prices may lower investors' expectations for the Bank of England's interest rate cut in August. Higher wages may increase consumer spending and demand driven inflation.

As the UK service industry becomes the focus of attention, investors should pay attention to the Bank of England's comments on interest rate cuts.

Canadian Dollar

On Wednesday, the Bank of Canada (BoC) will be the focus of the Canadian dollar. The consensus expectation is that BoC will maintain the interest rate at 4.75%. However, a survey shows that most economists predict a 25 basis point rate cut in BoC.

The 25 basis point interest rate cut and signals of potential more rate cuts in October and December may affect buyer demand for the Canadian dollar.

If the Bank of Canada cuts interest rates and hints at further cuts, the interest rate differential will benefit the US dollar.

Other Canadian economic data that needs attention include housing prices and wholesale sales data.

AUD

On Wednesday, the service sector PMI will affect buyer demand for the Australian dollar. The significant decline in service sector PMI may reverse investors' bets on the Reserve Bank of Australia (RBA) raising interest rates in the third quarter of 2024. The service industry contributes over 70% to the Australian economy and is also a major factor contributing to overall inflation.

Weaker industry activity and softer price pressure may alleviate demand driven inflation, keeping the RBA's cash rate unchanged.

Japanese Yen

On Wednesday, the July service sector PMI data will affect the recent trend of the Japanese yen. The Bank of Japan hopes that the service industry will drive demand driven inflation. The expansion of the service industry may increase investors' expectations for the Bank of Japan's interest rate hike in July.

However, investors should also consider factors such as input price and employment. Weaker employment growth and weakened input price trends may indicate a sluggish demand environment and weak inflation prospects. A softer inflation outlook may dampen investors' bets on the Bank of Japan raising interest rates in July.

On Friday, Tokyo's inflation data for July may be crucial for the Bank of Japan to raise interest rates. A higher core inflation rate may prompt the Bank of Japan to raise interest rates to restore price stability and support the weak yen.

In addition to data, it is also necessary to pay attention to comments from the Japanese government and central bank regarding the weakening of the yen and monetary policy.

China

On Monday, July 22nd, the People's Bank of China will set one-year and five-year loan market quoted rates (LPR). LPR interest rate cuts may drive demand for risk assets.

Lower bank loan interest rates may increase credit demand and consumption, potentially strengthening the Chinese economy.