Can anything derail the US labour market? Continued strength in jobs growth has given the Federal Reserve a free pass to keep raising rates – but lately signs of cracks may have emerged as weekly jobless claims topped 260k for three weeks in a row. Elsewhere the Reserve Bank of Australia may pause rate hikes after a sharp decline in inflation.

Here are the week’s key events:

Monday

Tankan surveys from Japan and China’s Caixin manufacturing PMI set the tone early in Asian trade ahead of a slew of final PMI reports from Europe. Swiss inflation numbers will drive CHF crosses. Canada has a bank holiday but the US session will focus on the ISM manufacturing PMI, including the closely watched prices component. Expect lighter action due to the US holiday on Tuesday.

Tuesday

July 4^th means it’s Independence Day holiday in the US, which will keep liquidity a bit thinner than usual. The highlight comes early with the Reserve Bank of Australia. A sudden drop in inflation that saw the CPI rate decline to a 13-month low of 5.6% from 6.8% in the previous month has boosted the case for the RBA to stand pat and pause its 13-month hiking cycle. AUDUSD had jumped to a 4-month high at 0.69 after the RBA sounded a hawkish note at its last meeting but the inflation report saw the cross extend its decline to a 3-week low. With minutes suggesting the June hike was finely balanced, it looks as though the case for a pause is strong.

Wednesday

Final services PMIs from the Euro area will be among the main economic releases at the start of the session, but all eyes are on the FOMC meeting minutes – how close a call was the decision to pause rate hikes in June and how quickly do participants expect to resume the cycle? And expect lots of energy chatter with the 8th OPEC International Seminar gets underway in Vienna, though this is not a formal OPEC+ meeting on production quotas.

Thursday

A selection of jobs reports from the US should whet the appetite ahead of the main nonfarm payrolls report on Friday. ADP numbers are often ignored but the higher frequency weekly unemployment claims data and JOLTS jobs openings are worth paying attention to. A recent rise in weekly claims has suggested some cracks appearing in the labour market. But at 10m+, job openings remain incredibly strong.

Friday

Jobs Day! A month ago the jobs report came in way stronger than expected just as weekly claims started to tick up – will that weekly data be captured in this report? Payrolls rose 339,000 in May, blowing apart the market expectation for 190,000. But unemployment rose to 3.7% from 3.4% and wage inflation edged a bit lower to 4.3% from 4.4%.