Asian Stocks, US Futures Jump as Traders Shift Focus to Fed Rate Decision

• Asian stocks powered higher early Monday and US futures followed right up
• Traders ramp up bets in hopes of the first rate cut by the Federal Reserve
• Nonfarm payrolls to show level of employment for July in the US

Asian Stocks Rise, US Futures Follow Suit

Asian stocks advanced to start the trading week early Monday with investors showing optimism into a busy week ahead. Futures contracts tied to the major averages in the US — S&P 500, Dow Jones Industrial Average, and Nasdaq Composite — were looking to open in green territory as well.

It’s a busy week for traders and global markets with a string of major economic data. But most of all, money managers are going to be focusing on one thing — the Federal Reserve’s rate-setting meeting. Slated for Tuesday and Wednesday, it’s the regular time for central bank officials to meet and discuss where to take the rate of interest in the US.

Expectations are set for a rate hold at a 23-year high of 5.50%. In case of any surprises, however, markets may react in a volatile manner and cause havoc across asset classes. The Fed, on the other hand, doesn’t want that and they’ve communicated clearly in the past that they are looking for more good data before they decide to lower the borrowing costs.

Fed Chair Jay Powell to Comment on US Economy

Against that backdrop, markets will be watching for clues into the next steps of the Federal Reserve. Chairman Jerome Powell will hold a press conference on Wednesday to wrap up the two-day meeting. In his comments, traders will be looking to get hints whether the central bank has intentions to lower the interest rates when they meet again in September. If so, markets may be in for a volatile ride.

Moreover, the news continues with a rate decision by the Bank of England. Expectations here are that the UK central bank will move to lower the rate of borrowing by 0.25% to 5% from 5.25%. The news could stir volatility in forex markets.

Nonfarm Payrolls Arrive Friday

And on Friday, the nonfarm payrolls data out of the US is likely to create fresh volatility across asset classes. Bitcoin, in particular, is highly sensitive to this report because it shows the pace of employment for a given month.

The US nonfarm payrolls report, commonly known as jobs data, shows how many new jobs were added for the month in both the private and public sector. It is one of the most popular gauges of economic health as it shows the level of resilience for the US economy.

A higher number usually means that the US economy is growing hot — and a lower reading, i.e. fewer jobs created, usually implies that the US economy is cooling and may need some stimulus by the Federal Reserve.