ECB to leave rates unchanged

In the US, market participants will be fully focused on the Federal Open Market Committee (FOMC) meeting scheduled for Tuesday when the Federal Reserve is expected to keep rates on hold. Of particular interest is the gauge of business conditions in non-manufacturing industries through the release of the ISM Non-manufacturing Composite for July.

Meanwhile, on the productivity side, markets will get hold of the non-farm productivity figures for the second quarter. Factory orders and wholesale inventories figures for June are also due to be released during the week. Elsewhere, markets will have some figures related to personal income, personal spending levels and personal consumption expenditure for June. Housing data, employment figures and consumer credit data are also expected.

The European Central Bank (ECB) rate decision will also be in the limelight throughout the week. Despite weaker activity level and the growing risk of recession, the ECB is still likely to emphasise upside risk to inflation, although market participants are expecting ECB to leave rates unchanged. In terms of data, markets will have the Purchasing Manager Index (PMI) services and composite for July. The Euro-wide Producer Price Index (PPI) is also due to be released. Market participants will also delve into the flash estimate of the Italian second quarter Gross Domestic product (GDP). The data schedule will also seek to capture the manufacturing trends in Germany and Spain with the release of the industrial production (IP) data. The trade balance figures for Germany and France are also expected this week.

In the UK, the main interest will be the Monetary Policy Committee (MPC) meeting, where the Bank of England is also expected to maintain rates on hold. The PMI construction and services figures are due to be released. A view on the production levels will be provided through industrial and manufacturing production figures for June. Some house price figures and consumer confidence data are also to be released.

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