Job Report, Powell Testimony and Central Bank Decisions to Guide Markets

This week promises to be a crucial one in finance, with investors eagerly anticipating the job report, Powell's testimony, and central bank meetings in Japan, Australia, and Canada. The U.K.'s GDP data will also be of interest. Investors are bracing themselves for more market volatility, and the Federal Reserve's March meeting is eagerly anticipated.

The first week of March promises to be an exciting one in the world of finance, with several critical events set to take place. The release of Friday's job report will be closely watched as it is the last one before the Federal Reserve's upcoming meeting. The report takes on extra significance after January's job growth prompted investors to re-evaluate their expectations for the future path of interest rates. It is expected that the economy added 200,000 jobs last month, while the unemployment rate is expected to hold steady at 3.4%. A stronger-than-expected report could stoke fears of more hawkish Fed action and keep pressure on the Fed to push rates higher.

Federal Reserve Chairman Jerome Powell is set to testify before Congress on Tuesday and Wednesday. His comments will be closely monitored for hints on whether a larger rate hike is under consideration this month after recent data pointing to still persistent inflation. Meanwhile, Wall Street rallied on Friday, but more market volatility could be in store ahead of the Fed's March meeting.

Central banks in Japan, Australia, and Canada are all to hold monetary policy meetings this week. The Bank of Japan Governor Haruhiko Kuroda chairs his last meeting on Friday, and the Reserve Bank of Australia meets on Tuesday. While officials had hinted at the prospect of further tightening, investors are now expecting rates to remain on hold. The Bank of Canada is also expected to hold rates steady when it meets on Wednesday.

The U.K. is set to publish GDP data on Friday, showing how the economy fared in January after narrowly avoiding falling into a recession in the final three months of 2022. Economists are expecting the gross domestic product to have expanded by just 0.1% in January from the prior month. The Bank of England Chief Economist Huw Pill said Thursday that Britain's economy is showing slightly more momentum than expected, but Britain is still the only G7 economy that is smaller than before the coronavirus pandemic. The BOE might now have to keep raising rates, as consumers appear to be holding up in the face of double-digit inflation.