By Noreen Burke

Investing.com -- Friday’s jobs report along with Wednesday’s minutes of the Federal Reserve’s June meeting are set to be the highlights of the holiday-shortened week ahead as worries over the prospect of a recession swirl. U.S. equity markets are embarking on an uncertain third quarter after the worst first half since 1970 with the Fed rapidly tightening monetary policy to quell the highest inflation in decades. Meanwhile, Australia’s central bank looks set to hike rates by a half percentage point on Thursday as inflation continues to soar. Here’s what you need to know to start your week.

U.S. jobs report

Recent economic data has added to signs that the economy is cooling amid aggressive policy tightening by the Fed, so investors will be closely watching Friday’s nonfarm payrolls report for how the labor market is performing, given the Fed’s inflation/employment mandate.

Economists are expecting 270,000 jobs to have been added in June, slowing from 390,000 in the previous month but still remaining strong. The unemployment rate is expected to remain steady at 3.6%, pointing to still solid demand even as the economy cools. Average hourly earnings are expected to have increased by 5% on a year-over-year basis.

A weaker-than-expected jobs report could exacerbate fears of a recession and bolster the argument for a less aggressive pace of rate hikes, following the Fed’s most recent 75 basis point move.

Fed minutes

The Fed is expected to push ahead with another 75 basis point rate hike at its upcoming July meeting, but the path for September is less clear.

Wednesday’s minutes from the central bank’s June meeting will give investors some insight into how policymakers see the future path of interest rates as markets remain focused on the prospect of a recession.

Meanwhile, the European Central Bank is to publish the minutes of its June meeting on Thursday, when it announced plans to deliver its first interest rate hike since 2011 in July, followed by a potentially larger move in September with Eurozone inflation running at a record high.

U.S. economic data

The U.S. is to publish data on JOLTs job openings for May on Wednesday with the number of vacancies expected to slow only slightly to 11 million from 11.4 million in April, equivalent to almost two vacancies for every unemployed American.

The lack of suitable workers available to fill these positions has seen wages increase as companies compete for labor, feeding into the spiral of faster inflation.

The U.S. is also to publish the ISM services PMI for June after last’s week’s ISM manufacturing PMI pointed to a slowdown in both new orders input prices, along with data on factory orders, initial jobless claims and consumer credit.