This week’s main risk events will come from company Q2 earnings, the ECB meeting and PMI data. However, the central bank meeting could be relatively quiet as the ECB will very likely remain patient and sit on its hands regarding another rate cut. With the next potential EU-US tariff escalation not expected until the start of next month, there’s little reason for more ECB policy easing. Rate setters only act on measures once they’re set in stone and in effect, not when they’re announced. Meanwhile, strength in the euro has eased slightly in July, which also justifies an on-hold meeting.

The most important data will be the purchasing managers indices that reveal global evidence on growth momentum, supply chain pressures, hiring appetite and inflation risk. Australia and Japan will kick off the readings, followed by France, Germany, the Eurozone metrics, the UK and US. Composite PMIs for every one of these regions are signalling modest growth. Otherwise, it is quiet on the US data front, with the dollar rallying for a second week, something we haven’t seen in two months. But confidence in low and stable US inflation is eroding due to the ongoing Trump attacks on the Fed’s Powell. That is not positive for the greenbacks’ longer-term outlook. The 50-day SMA has capped the upside recently, as it did in May and June.

The Q2 US earnings season broadens out this week with 104 S&P500 firms’ releases over the coming week and the names diversify beyond the usual early focus upon financials. Positive surprises are encouraging so far and have boosted risk sentiment. Some of the ‘Magnificent 7’ will lead the way with results from Tesla and Google’s parent, Alphabet, although admittedly some are recently more magnificent than others. As a group, they’re back to outperforming the broader market that has returned toward performance being highly concentrated in a handful of names. Recent record highs in the major indices look like being broken on a technical basis.

In Brief: major data releases of the week

Tuesday, 22 July 2025

– RBA Minutes: These minutes could offer some detail behind the meeting that resulted in the surprise hold on July 8. Key could be defining “a little more information” on inflation progress. That may come on July 29 when Q2 readings are released. Recent disappointing consecutive jobs reports since the decision have likely made the minutes a little stale.

Thursday, 24 July 2025

– Eurozone PMIs: Manufacturing is predicted to tick higher to 49.7 from 49.5. Services dropped below the 50 level in May but is seen at 50.8 from 50.5. The composite is expected to rise to 50.6 from 50.2. Surveys point to a mildly positive tone though US tariff headwinds loom large.

– ECB Meeting: No rate cut is expected but markets are pricing in one more 25bps move for this year, either in September or December. A wait-and-see stance seems likely. Any guidance will be key, with US tariff risk and a strong euro the major determinants.

Friday, 25 July 2025

– Tokyo CPI: This data is the forerunner to nationwide inflation and is forecast to ease to 3% y/y with the core unchanged at 3.1%. CPI prints have been stronger than the BoJ’s expectations and the bank may raise its outlook at its upcoming meeting.

– UK Retail Sales: Expectations are for June headline activity to print at 1.1% and core at 1.0%. Warm weather may have boosted non-essential sectors like retail, but spending might have been cautious due to ongoing economic uncertainty.