World Week Ahead: Fed minutes in focus

Following a week in which China's surprise currency devaluation rocked global markets, investors will eye the minutes from the latest Federal Reserve meeting to gauge whether the US central bank will lift interest rates next month.

While calm had returned to equity markets on both sides of the Atlantic by the end of the week, as China's central bank on Friday increased its reference rate for the first time since Tuesday's devaluation, the yuan's devaluation still left a scent of uncertainty in the air. The yuan dropped 2.8 percent for the week.

"It's just a tug of war between investors who believe there's some more downside ahead and those who think we've corrected enough," Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland, told Bloomberg. "There's more of a risk-off sentiment than risk on."

Last week on Wall Street, the Dow Jones Industrial Average rose 0.6 percent, the Standard & Poor's 500 Index gained 0.7 percent, while the Nasdaq Composite Index added 0.1 percent.

"If you net off everything that has happened [last] week -- the yuan, Greece and data -- nothing has really left a lasting impact," Peter Chatwell, a rates strategist at Mizuho International in London, told Bloomberg. "The market has been pricing in downside risks from China for a long time. The fact that the currency now has more room to float just allows this to be expressed through a different channel."

On Wednesday, the Fed releases the minutes from its July meeting. A day later, Fed officials might offer fresh clues; San Francisco Fed President John Williams is set to speak in Jakarta, Indonesia, while Minneapolis Fed President Narayana Kocherlakota is scheduled to hold a talk in Seoul, South Korea.

Most bets are for the Fed to lift rates in September, underpinned by reports on retail sales and industrial production last week. The coming days will offer fresh data on the US real estate industry, which has begun to show signs of improvement, with reports on the housing market index today, housing starts on Tuesday, and existing home sales on Thursday.

Other economic data scheduled for release this week include the Empire State manufacturing survey, due today; consumer price index, due Wednesday; weekly jobless claims, Philadelphia Fed business outlook survey, and leading indicators, due Thursday; and PMI manufacturing flash, due Friday.

Wal-Mart, Home Depot, Lowe's, Target, Gap, and Deere are among the US companies scheduled to release earnings this week.

In Europe, the Stoxx 600 Index shed 2.7 percent last week.

A report on Friday showed the euro-zone's gross domestic product grew a lower-than-expected 0.3 percent in the three months through June. Data scheduled for release in the coming days include the euro-zone trade balance, due today; euro-zone current account, due Wednesday; Germany's producer price index, due Thursday; as well as Germany's GfK consumer sentiment, and euro-zone consumer confidence, due Friday.

Oil continued its downward slide for a seventh straight week as concern about the global glut persists, and there appears little relief in sight.

"It's difficult to point to anything positive in the market," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, told Bloomberg.

"Most likely, there will be more volatility in the market and part of the reason is oil prices and the worry that somehow the price of oil is a reflection of inflation and deflation," Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey, told Reuters.

(BusinessDesk)