Weekly Market Outlook (February 3–7, 2025)

by Marcus Klebe
17:06, 2025/02/01

This week, several key economic reports will be released, with a strong focus on U.S. labor market data and the Bank of England’s (BoE) monetary policy decision.

Key Events of the Week:

Monday: BoJ Summary of Opinions, Australia Retail Sales, China Caixin Manufacturing PMI, Switzerland and Canada PMI, Eurozone Consumer Price Index (CPI), U.S. ISM Manufacturing PMI.
Tuesday: U.S. Job Openings, New Zealand Labor Market Report.
Wednesday: Japan Average Wages, China Caixin Services PMI, Eurozone Producer Price Index (PPI), U.S. ADP Employment Report, Canada Services PMI, U.S. ISM Services PMI.
Thursday: Switzerland Unemployment Rate, Eurozone Retail Sales, BoE Interest Rate Decision, U.S. Initial Jobless Claims.
Friday: Canada Employment Report, U.S. Non-Farm Payrolls (NFP), University of Michigan Consumer Sentiment.

Monday: Eurozone Inflation and U.S. Manufacturing

Eurozone inflation is expected to remain at 2.4% YoY (previous: 2.4%), while core inflation could ease slightly to 2.6% (previous: 2.7%). Recent data from France and Germany suggest a further decline, increasing market expectations of ECB rate cuts. Currently, at least three rate cuts are priced in for the year, but this could increase if U.S. tariffs rise sharply under Trump’s administration.

In the U.S., the ISM Manufacturing PMI is expected at 49.8 (previous: 49.3). The latest S&P Global Manufacturing PMI showed a return to growth with optimistic commentary: "The U.S. economy is starting 2025 on a strong note, with hopes that the new administration will further boost growth." Manufacturing sentiment has improved as businesses anticipate pro-growth policies from the new U.S. government.

Tuesday: U.S. Job Openings & New Zealand Labor Market

U.S. job openings (JOLTS report) are expected at 8.0 million (previous: 8.098 million). The last report surprised to the upside, reflecting improving business sentiment following rate cuts and Trump’s election victory. Hiring remains stable, though low quit and hire rates indicate that while finding a new job is harder, job security has improved.

In New Zealand, Q4 employment is expected to decline by -0.2% (previous: -0.5%), while the unemployment rate is projected to rise to 5.1% (previous: 4.8%). Wage growth is forecasted at 3.0% YoY (previous: 3.4%). With inflation under control, the Reserve Bank of New Zealand (RBNZ) is now focused on economic growth, and markets expect 120 basis points of rate cuts by year-end.

Wednesday: Japanese Wages & U.S. Services Sector

Japanese wages are forecasted to increase by 3.8% YoY (previous: 3.0%). The Bank of Japan (BoJ) recently raised rates by 25 basis points, citing stronger wage growth. If this trend continues, markets may price in another rate hike sooner.

The U.S. ADP Employment Report is expected to show 150,000 new jobs (previous: 122,000). While ADP data isn't always a reliable indicator for NFP, it suggests continued labor market stability.

The ISM Services PMI is expected at 54.2 (previous: 54.1). The last S&P Global Services PMI was weaker than expected, though analysts remain positive: "Despite a slight slowdown in activity, business confidence remains high, supported by expectations of economic stimulus. Notably, hiring levels have reached a 2.5-year high."

Thursday: BoE Rate Decision & U.S. Jobless Claims

The Bank of England is expected to cut rates by 25 basis points to 4.5%, with a likely vote split of 7–2. In the last meeting, the BoE held rates steady, but three members already voted for a cut. Markets currently price in three rate cuts this year, while the BoE leans toward four.

Recent U.K. PMI data pointed to a mild economic recovery, but analysts warn of stagnation risks. Businesses continue to reduce jobs, while inflationary pressures are re-emerging.

U.S. initial jobless claims remain a key labor market indicator. New claims are expected at 215,000 (previous: 207,000), while continuing claims have recently declined.

Friday: Employment Reports from Canada & U.S.

Canada is expected to add 25,000 jobs in January (previous: 90,900), while the unemployment rate could edge up to 6.8% (previous: 6.7%). The strong December jobs report supported wage growth, but concerns over U.S. tariffs may weigh on the Canadian dollar.

In the U.S., Non-Farm Payrolls (NFP) are expected to show 170,000 new jobs (previous: 256,000), while the unemployment rate is projected to remain steady at 4.1%. Average hourly earnings are forecasted to rise by 3.8% YoY (previous: 3.9%).

The last report surprised with strong job gains, leading to a hawkish shift in rate expectations. However, inflation has remained moderate, keeping the Fed’s focus on price stability. The labor market remains resilient, though falling wage inflation and low quit rates suggest limited upward pressure on prices.

-----------------------------------------------------------------------------------------------------------------------------------

Disclaimer:

The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.

There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure (https://www.jfdbrokers.com/en/legal/risk-disclosure).