Investing.com - The Federal Reserve policy meeting is expected to be the biggest event for markets this week. Expectations for a rate cut have increased in recent weeks as President Donald Trump's trade policies fueled fears over the prospect of a U.S. recession.
Investors will also be looking at central bank meetings in Europe, the U.K. and Japan, as well as the latest trade developments and economic data.
Here’s what you need to know to start your week.
1. Fed may open door to July rate cut
The Fed will deliver its latest monetary policy decision on Wednesday, with most economists expecting no change, but persistent worries over economic fallout from the U.S.-China trade war could prompt the U.S. central bank to clear the way for a rate cut later this year.
May’s weak jobs report and softer-than-expected inflation data have added to concerns over the economic outlook.
Markets will be watching for any shift in language after Fed Chair Jerome Powell said on June 4 that the Fed would act "as appropriate" to address risks from the trade dispute.
The Fed will also release updated economic forecasts, which include its outlook on economic growth and inflation and the dot-plot, which charts the Fed’s official interest rate forecast.
2. ECB, BOE and BOJ
Aside from the Fed, market watchers will have their attention focused on the European Central Bank’s annual three-day meeting in Sintra, Portugal and policy meetings in Japan and Britain.
It was in Sintra two years ago that Mario Draghi sparked a bond selloff by remarking on the euro zone's "strengthening and broadening" economic recovery, but two years later Draghi is winding up his term with little sign of growth or inflation and a real likelihood of more rate cuts.
The Bank of Japan has a policy decision on Thursday, but economists expect it to keep monetary policy on hold.
Similarly, the Bank of England is expected to keep rates unchanged at its policy meeting later Thursday, with some economists watching for a possible split in the vote after a year of unanimous decisions.
3. Economic data to watch
Economic data will continue to be closely watched as investors parse whether the growth outlook warrants central bank action.
China's May house price data and Germany's closely-watched ZEW sentiment index are out Tuesday. Wednesday will bring Japanese export figures and U.K. inflation. Reports on the U.S. Philly Fed business index and British retail sales are due on Thursday along with an early reading of Eurozone consumer confidence for June.
The week ends with a key snapshot of the world's economic health - the Purchasing Managers' Indexes (PMI) of business activity. U.S. manufacturing PMIs are still holding above the 50-mark that indicates an economy is growing. A move below is what everyone is watching for.
4. Trade developments
Trade developments will remain in focus as Congressional hearings on trade tariffs get underway on Monday.
U.S. Trade Representative Robert Lighthizer is to testify before the House Ways & Means Committee on Tuesday during a hearing to discuss Trump’s trade agenda.
The hearing will cover “negotiations with China, Japan, the EU, and UK; new NAFTA/USMCA; U.S. participation in the WTO; and other matters,” Chairman Richard Neal (D-MA) said in a statement.
The testimony comes amid growing doubts over whether Washington and Beijing will iron out trade issues by the G20 trade conference at the end of the month.
5. Quiet week for earnings
Adobe Systems (NASDAQ:ADBE) is due to report second quarter earnings after the close on Tuesday. Analysts on average expect $1.78 a share profit on sales of $2.7 billion. In March, Adobe damped analyst hopes when it gave a profit forecast for the current quarter that fell short of Wall Street’s estimates.
The world’s largest marijuana producer, Canopy Growth (NYSE:CGC) and grocer Kroger (NYSE:KR) are due to report on Thursday. Meanwhile, General Electric (NYSE:GE) will hold its GE Aviation & GECAS Investor Day presentation on Tuesday.
--Reuters contributed to this report