Investing.com - Global financial markets will focus on Federal Reserve Chair Janet Yellen's testimony to both houses of Congress in the coming week, as they continue to mull the possible end of monetary stimulus from central banks around the globe.
Investors will also keep an eye out on a few U.S. economic reports, with Friday's inflation data in the spotlight, for further clues on the timing of the next Fed rate hike.
In the U.K., market participants will be looking ahead to the monthly jobs report for further hints on the strength of the economy and the likelihood of the Bank of England raising interest rates this year.
Elsewhere, China is to release monthly trade and inflation data amid recent signs of cooling in the world's second largest economy.
In addition, traders will be awaiting a rate announcement from the Bank of Canada, with markets leaning toward expecting the first rate hike in nearly seven years.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. Fed Chair Janet Yellen Testifies
Federal Reserve Chair Janet Yellen is set to deliver her semi-annual monetary policy testimony on the economy before Senate and House committees in Washington DC.
Yellen is scheduled to testify on the economy before the Senate Banking Committee at 10:00AM ET (1400GMT) Wednesday. On Thursday, she will appear in front the House Financial Services Committee also at 10AM ET.
Text of the testimony will be released 90 minutes before she starts speaking.
Her comments will be monitored closely for any new insight on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its massive balance sheet.
Besides Yellen, there are also a number of Fed speakers in the coming week, with San Francisco Fed Chief John Williams, Fed Governor Lael Brainard, Kansas City Fed President Esther George, Chicago Fed President Charles Evans and Dallas Fed Chief Robert Kaplan all on the agenda.
The latest minutes from the Federal Open Market Committee's policy discussions showed a lack of consensus among policymakers over the outlook for inflation and how it could impact on the future pace of interest rate increases.
Several officials also wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August, but others preferred to wait until later in the year.
The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has since raised doubts over whether the U.S. central bank will be able to stick to its planned tightening path.
Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase was seen at around 45%.
2. U.S. Inflation Data
The Commerce Department will publish June inflation figures at 8:30AM ET (1230GMT) Friday. Market analysts expect consumer prices to ease up 0.1%, while core inflation is forecast to increase 0.2%.
On a yearly base, core CPI is projected to climb 1.7%. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Rising inflation would be a catalyst to push the Fed toward raising interest rates.
At the same time Friday, the Commerce Department will publish data on June retail sales. The consensus forecast is that the report will show retail sales rose 0.1% last month. Core sales are forecast to inch up 0.2%.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.
Besides the inflation and retail sales reports, this week's calendar also features U.S. data on JOLTS job openings, producer prices, initial jobless claims, industrial production, as well as preliminary Michigan consumer sentiment.
This week also marks the start of the second-quarter earnings season in the U.S., with major U.S. banks JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all reporting Friday.
3. U.K. Employment Report
The U.K. Office for National Statistics will publish the monthly jobs report at 0830GMT (4:30AM ET) on Wednesday. The claimant count change is expected to rise by 10,400 in May, with the jobless rate holding steady at 4.6%. Wage growth including bonuses is forecast to rise 1.8%.
Market participants will also pay close attention to comments from Bank of England Chief Economist Andy Haldane and BOE Deputy Governor Ben Broadbent, who are both scheduled to speak Tuesday morning.
There has been a significant shift in rhetoric toward higher interest rates from BOE policymakers during the past two weeks, despite the uncertainty of Britain starting to negotiate its way out of the European Union. They are prompted by a surge in inflation caused in large part from a plunge in sterling after the Brexit vote.
4. China Trade Figures
China is to release June trade figures at around 0300GMT on Thursday. The report is expected to show that the country’s trade surplus widened to $42.4 billion last month from a surplus of $40.8 billion in May.
Exports are forecast to have climbed 9.0% in June from a year earlier, following a jump of 8.7% a month ago, while imports are expected to rise 13.1%, after increasing 14.8% in May.
Additionally, on Monday, the Asian nation will publish data on June consumer and producer price inflation. The reports are expected to show that consumer prices rose 1.5% last month, while producer prices are forecast to increase by 5.5%.
Analysts expect China's economy to cool in coming months after a strong first quarter, with recent factory activity data also indicating a gradual slowdown is underway.
5. Bank of Canada Rate Decision
The Bank of Canada's latest interest rate decision is due at 10:00AM ET (1400GMT) on Wednesday, with most experts expecting the central bank to raise its benchmark rate by 25 basis points to 0.75%.
Speculation that the BOC was preparing to raise its key interest rate ramped up earlier this month after Governor Stephen Poloz said that low interest rates appeared to have done their job.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/