In the European session, the main highlight is the Swiss CPI which is expected at 0.2% Y/Y. The data is unlikely to change much interest rates expectations as the market is already pricing in a pretty dovish path with a return to negative rates. We will likely need a big deviation from the expected numbers to trigger a repricing, with an upside surprise likely having a larger impact.
In the American session, the focus will switch to the US ISM Services PMI. The regional reports have been showing weakness as many other consumer and business surveys due to the trade uncertainty. The consensus sees a drop to 50.2 vs. 50.8 prior but following the strong NFP report, it’s unlikely to see the market pricing in a more dovish path ahead of the FOMC decision on Wednesday.
The focus this week will be on the first trade deal announcement. As a reminder, US officials said that the first trade deal would have been announced last week or this one. If we don’t get anything this week either, then the market might get disappointed and start questioning the optimism that got priced in in the last couple of weeks.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
