A plain-language look at last week's key market events. What happened, why it mattered — no predictions, no noise. Updated every weekend.
Thursday's European Central Bank decision was the week's main event. The ECB kept all three of its key interest rates unchanged, leaving the main refinancing rate at 2.40%, exactly as markets expected.
On paper, a hold at the expected level sounds like a non-event. The real story was in President Lagarde's press conference. She confirmed the decision was unanimous — but also revealed that some Governing Council members had asked themselves whether the bank should be considering a hike. That's a telling detail. The ECB only raised rates last month (its June meeting delivered a 25 basis point increase), and already parts of the council are wondering whether one is enough.
The reason is energy. The conflict in the Middle East has kept oil prices volatile and well above where they sat before hostilities began, and the ECB is watching whether those energy costs bleed into wider prices across the euro area. For now, Lagarde said the energy outlook sits close to what the bank's June projections assumed — in plain terms: bad, but not worse than they'd planned for.
For bias purposes, the takeaway is simple: the ECB has shifted from a bank that finished cutting to a bank that has started hiking and is debating how far to go. That's a materially different backdrop for the euro than six months ago.
Two of the week's big inflation reports told the same story: headline inflation came down, and cheaper fuel did most of the work.
Canada kicked the week off on Monday. Consumer prices actually fell 0.4% on the month — a bigger drop than the 0.2% decline expected — pulling annual inflation down to 2.8% from 3.2%. A brief ceasefire in the Middle East during June took the pressure off oil, and Canadian petrol prices dropped sharply as a result. Crucially, the Bank of Canada's preferred core measures cooled too:
With both core gauges now sitting below 2%, the report supports a Bank of Canada content to stay on hold — it has kept its rate at 2.25% for six straight meetings, treating the oil-driven inflation spike as a supply problem that rate rises can't fix. One caveat worth knowing: the ceasefire that brought fuel prices down has since collapsed, and pump prices were already climbing again as the data landed.
The UK followed on Wednesday with a similar picture. Annual inflation eased to 2.6% — below the 2.7% forecast and down from 2.8% — its lowest reading since March 2025. Falling fuel prices again drove the move, with diesel dropping over 10 pence a litre in the month. Services inflation, the sticky wage-linked measure the Bank of England watches most closely, edged down only slightly to 3.6%.
UK jobs data on Tuesday leaned the same way: far fewer people claimed unemployment benefits than expected (6.7K against a forecast of 29.4K), while wage growth slowed to 4.3%. Softer inflation plus cooling wage growth eases some pressure on the Bank of England, though its own forecasts still see inflation heading back above 3% later this year as energy effects wash through. Friday's retail sales rounded out the UK week with a surprise: sales rose 1.0% against expectations of a 0.3% fall.
While Canada and the UK cooled, New Zealand heated up. Quarterly inflation for Q2 came in at 1.5% — above the 1.4% forecast and a big jump from 0.9% the previous quarter — pushing annual inflation to 4.1%, its highest in over two years and well outside the Reserve Bank of New Zealand's 1–3% target band.
The culprit is the same one moving every inflation number this year — fuel — just pointing the opposite direction. Petrol prices in New Zealand rose 27.5% over the year and diesel a remarkable 71%, reflecting the country's exposure to imported fuel costs from the Middle East conflict. Strip fuel out and annual inflation would have been 2.9%. The print also came in above the RBNZ's own estimate, notable because the bank had only just raised its cash rate to 2.50% earlier in July — its first hike in three years — while signalling more tightening may be needed.
Thursday's Australian employment report was the data shock of the week. The economy added 76,300 jobs in June — roughly five times the 16,400 economists expected, and the strongest monthly gain in over a year.
Two details add nuance. First, the unemployment rate held at 4.4% despite the surge — that's because more Australians entered the workforce at the same time, with the participation rate climbing to a one-year high of 67%. More people looking for work and finding it. Second, most of the gain (47,000) came from part-time roles, and hours worked grew far more modestly than headcount — so the underlying demand for labour, while clearly strong, is a touch less dramatic than the headline suggests.
Markets read it as strong regardless: the Aussie dollar and bond yields both climbed on the release. With the Reserve Bank of Australia having already hiked three times this year and inflation pressure from higher oil still in the system, a labour market this resilient keeps the question of further hikes alive rather than settled.
Friday's flash PMIs — early survey-based readings of business activity for July — beat expectations almost across the board. Germany led the way, with its manufacturing PMI jumping to 52.2 against a forecast of 50.4 (anything above 50 signals expansion), the strongest factory output growth in over four years. France remained the laggard, with both its readings hovering around the 50 line, but even there the picture improved on services. The eurozone as a whole returned to growth for the first time in four months.
The UK joined in: manufacturing printed 52.8 and services 51.8, both comfortably ahead of forecasts, pulling the British private sector clearly back into expansion after months of flat-to-contracting readings.
One honest caveat: these surveys were collected between 9 and 22 July — largely before the latest flare-up in the Middle East pushed oil prices higher again. The survey compilers themselves flagged that renewed energy pressure could undo this momentum. Worth keeping in mind before treating the bounce as a trend.
Across the Atlantic, the US had a quiet data week by its standards, but weekly jobless claims came in at 187K against 211K expected — a reminder that the American labour market remains tight.
This recap summarises publicly reported economic data and central bank communications for the stated week. It is general information, not financial advice, and looks backwards only — it makes no predictions. Combine it with your own bias work (COT positioning, central bank direction, seasonal tendency) before drawing any conclusions.