By Dow Jones Newswires Staff
Below are the most important global events likely to affect FX and bond markets in the week starting July 21.
Purchasing managers' surveys in the U.S. and a number of other countries will be watched closely for any indication on the impact of President Trump's tariff policies.
A decision by the European Central Bank will be the other highlight of the week, where interest rates are expected to be left on hold after seven consecutive reductions.
In Asia, markets are focused on Japan's Upper House elections, which could unseat Prime Minister Ishiba and delay trade talks with the U.S. A new coalition may push for aggressive fiscal easing and tax cuts, complicating its central bank's path to policy normalization.
U.S.
Provisional purchasing managers' surveys on U.S. manufacturing and services sector activity during July will be the highlight of an otherwise quiet week for U.S. economic data and events.
Markets are still trying to assess the extent of any economic damage from Trump's tariff policies, although recent U.S. data have suggested that so far the economy has continued to perform relatively well and with limited impact on prices.
"As the final shape of the U.S. tariff regime is still up in the air, the recent moderate inflation trend has apparently not helped to reduce uncertainty about the ultimate impact of Trump's trade policy on inflation," analysts at ABN Amro said.
Other U.S. data include existing home sales on Wednesday and new homes sales on Thursday, both for June. Weekly jobless claims are released Thursday, followed by June durable goods figures on Friday.
Markets will continue to await any news on U.S. tariff deals with other countries ahead of the Aug. 1 deadline for when reciprocal tariffs will take effect.
The Treasury will auction $13 billion in 20-year bonds on Wednesday and $21 billion in inflation-protected TIPS on Thursday.
Eurozone
The European Central Bank is widely expected to leave its policy rates on hold on Thursday, with the deposit rate staying at 2.00%. Market participants will be looking for any clues on when it might cut interest rates again, though analysts said the central bank will likely try to avoid giving signals for the next meeting in September.
"Faced once again with considerable tariff uncertainty we think the ECB will try to say as little as possible at its July meeting until there is more clarity about the future EU-U.S. trading relationship," RBC Capital Markets said.
Confidence surveys and the European Central Bank's policy meeting will be in the market's focus too. Flash estimate purchasing manager indexes for July for France, Germany and the eurozone are due on Thursday, giving a snapshot of activity in the manufacturing and services sectors.
RBC Capital Markets expects both manufacturing and services sectors have held up well across the region. The PMI readings could be dampened by Trump's announcement of 30% tariffs on eurozone imports into the U.S., although the impact of this should be limited, it said in a note.
Germany's GfK consumer sentiment index is scheduled for Thursday. It is followed by Friday's release of the Ifo economic sentiment index, as well as Italy's consumer and business confidence and France's consumer confidence data. Eurozone money supply data for June are released Friday.
Germany will auction 2033- and 2035-dated green Bunds on Tuesday, and 2035-dated conventional Bunds on Wednesday. The week's other issuer will be Italy on Thursday.
U.K.
U.K. provisional purchasing managers' surveys on manufacturing and services activity during July are released on Thursday. Alongside U.K. retail sales data for June and the latest GfK consumer sentiment survey for July on Friday, these will provide a snapshot of how the U.K. economy is performing.
Recent data have pointed to a weak U.K. economy of late, with gross domestic product contracting in April and May. High levels of inflation mean the Bank of England is expected to stick to gradual, quarterly reductions to interest rates, however.
Investec economist Ellie Henderson said in a research note that markets will likely focus on the employment components of the PMI data given the recent focus on a weakening U.K. jobs market. Bank of England Governor Andrew Bailey recently told The Times that more aggressive rate cuts were possible if the jobs market slows too quickly.
U.K. public finances data for June on Tuesday will also be watched given recent rises in U.K. government-bond yields due to concerns about the country's fiscal health.
"With all the talk of fiscal black holes following the recent U-turns by the Labour government on the welfare bill and winter fuel payments the public finance release will likely garner more attention than usual," Investec's Henderson said.
The U.K. plans to sell index-linked government bonds, or gilts, maturing in September 2035 on Tuesday and then conventional gilts maturing in January 2040 gilt on Wednesday.
Hungary
The Hungarian central bank announces a rate decision on Tuesday. It is expected to keep its key policy rate on hold at 6.50%.
"Persistently high inflation expectations in Hungary, coupled with ongoing geopolitical and trade uncertainties at a global level, continue to cast a shadow over the local inflation outlook and play a central role in monetary policy decision-making," ING strategist Peter Virovacz said in a note.
"We still see no scope for the National Bank of Hungary to ease monetary policy in the short term," he said.
Turkey
Turkey's central bank is expected to cut interest rates when it announces a decision on Thursday.
Interest rates are currently at a very high 46% as the country has had to battle against elevated inflation. Analysts at ING expect a "measured" 250 basis point reduction to 43.5%, with the central bank then continuing with incremental cuts after that as long as the trend for lower inflation continues.
Japan
The key focus for global financial markets will be Japan's Upper House elections on Sunday and how the outcome may affect the country's debt-to-GDP ratio, which is among the highest in the developed world. Some opposition parties have campaigned for a cut in the consumption tax, potentially financed via increased bond issuance.
Recent surveys suggest that Japanese Prime Minister Ishiba's ruling coalition may struggle to retain its majority of 50 seats, said DBS Group Research's Ma Tieying.
"If the coalition falls short, it could lead to Ishiba's resignation or a new coalition government," the economist said. "In the event of a resignation, Japan-U.S. trade negotiations could face further delays due to a leadership vacuum."
A new coalition government would likely pursue aggressive fiscal loosening, including a possible consumption tax cut as advocated by opposition parties, Tieying said. The Bank of Japan's monetary policy normalization would also likely be delayed, she added.
On Wednesday, Bank of Japan Deputy Gov. Shinichi Uchida is scheduled to meet with local leaders in Kochi, one of Japan's four main islands. Any comments he makes will likely be closely scrutinized by markets amid uncertainty over the impact of U.S. tariffs on Japan's economy.
Many economists expect the BOJ to keep rates unchanged at its July 30-31 meeting, given the prevailing uncertainty. At its previous meeting, BOJ Gov. Kazuo Ueda said the central bank would continue considering further interest rate hikes depending on economic conditions.
Government data due Friday is expected to show inflation remains above the BOJ's 2% target. Core consumer prices excluding fresh food in the Tokyo metropolitan area are expected to have risen 2.9% in July from a year earlier, slowing slightly from June's 3.1% gain, according to a Quick poll of economists.
Separately, the Ministry of Finance is set to auction about 400 billion yen of 40-year JGBs on Wednesday. The issuance will reopen the May 2025 issue. Market participants will closely watch investor demand, especially given the election outcome could raise concerns about the country's fiscal position.
Australia/New Zealand
The Reserve Bank of Australia will publish minutes from its July 8 policy meeting on Tuesday, when the board voted six to three to hold rates steady-disappointing money markets that had fully priced in a cut.
The minutes are expected to reiterate the RBA's view that it wants to review second-quarter inflation data, due at the end of the month, before considering a further rate cut in August
The RBA's cautious stance is under pressure after data on Thursday showed a rise in unemployment and a sharp drop in full-time jobs in June.
Economists are warning that the RBA risks a policy error, given that the economy is weak and inflation appears largely under control.
Attention will also be on RBA Governor Michele Bullock, who is scheduled to speak Thursday. She is expected to defend the bank's caution and emphasize lingering concerns over inflation.
Economists say it will take a particularly hot inflation reading in the second quarter to scuttle an interest rate cut, the third this year, next month.
In New Zealand, attention will center on second-quarter inflation data due Monday. Economists expect a slight uptick, but the Reserve Bank of New Zealand is unlikely to respond with fresh tightening signals.
Instead, the RBNZ is expected to remain focused on New Zealand's stalling economic recovery and risks from a slowing world economy.
China
China's data calendar is virtually empty, following a deluge of first-half indicators that painted a mixed picture of the economy.
The broad takeaway: growth has held up better than expected, but may falter without meaningful stimulus.
Markets will watch for any policy announcements, though expectations are low amid heightened uncertainty around tariffs.
On Monday, the central bank will announce loan prime rates - the benchmark for most household and corporate loans - which are expected to remain unchanged.
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July 20, 2025 20:14 ET (00:14 GMT)
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