We are coming off key U.S. labor market data and the OPEC+ decision on oil production. Ahead lie other important events that could impact markets. Chief among them will be U.S. CPI inflation. We will also get the European Central Bank’s decision, while in France a vote of confidence in the government will take place. Apple is also set to unveil a new iPhone model, which will draw investor attention to this major tech company. This week, three markets in particular are worth watching: EURUSD, FRA40, and US100.
EURUSD
This week will be critical for the EUR/USD currency pair due to two events. The first is Thursday’s U.S. CPI inflation reading for August. Analysts expect higher figures, linked to tariffs that came into effect last month. The question is whether this will be only a minimal increase or significant enough to reignite debate on the longer-term impact of tariffs on inflation. On Thursday we will also get the European Central Bank’s decision. In this case, markets do not expect any change in interest rates. We should also not forget the impact of Monday’s confidence vote in France, which may also influence the European currency.
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On Monday, September 8, a vote of confidence will be held for Prime Minister Francois Bayrou’s government. The vote is effectively a plebiscite on next year’s budget, which includes substantial spending cuts. The ruling coalition lacks a parliamentary majority, while both far-right and far-left groups have already declared they will vote against. Analysts expect the government to fall, which could have serious consequences, including a possible downgrade of France’s credit rating if the country fails to reduce its extremely high deficit. On the other hand, Prime Minister Bayrou is open to negotiations with the opposition to gain support, though deficit reduction remains a necessary condition. The CAC 40 has been one of the weaker major European indices this year.
US100
A U.S. rate cut is drawing closer, boosting sentiment on Wall Street. Strong corporate earnings are fueling the rally. The S&P 500 (US500) has already hit record highs, while the Nasdaq 100 (US100) is very close to breaking its own record. The upcoming launch of the new iPhone may provide the catalyst for gains that push the tech index to new highs. In addition, late last week markets reacted positively to strong results from Broadcom, which also announced a partnership with OpenAI to develop new chips intended to rival Nvidia.
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