This week, key inflation data of US will give fresh clues on the potential size of an expected September rate cut by the Federal Reserve. Markets look likely to remain volatile, while retail earnings will be watched for clues on the strength of consumer spending.
Major Economic & Inflation Data and Event for the week
Monday:
- India’s latest retail inflation data (CPI) print is due on Monday, with expectations of a decline to 3.65% in July from 5.08% in June. This drop in inflation could have implications for RBI’s policy decisions.
Tuesday:
- The U.S. economic calendar kicks off with the Core Producer Price Index (PPI) for July, which is expected to increase by 0.2%, down from the previous 0.4%. The overall PPI m/m is forecasted to remain unchanged at 0.2%. These figures will be closely watched for signs of inflationary pressures in the production sector.
- The UK economic calendar starts with the labour market report. Wage growth is expected to moderate to 14.5k from the previous 32.3k. Bank of England (BoE) policymakers will likely need to see a further drop before considering rate cuts.
Wednesday:
- The Consumer Price Index (CPI) data of US is highly anticipated, with expectations of a 0.2% increase in July after a 0.1% decline in June. Annual inflation is likely to remain steady at 3%.
- Core inflation, which excludes food and energy prices, is forecasted to rise by 0.2% month-on-month and 3.2% year-on-year in July. Any moderation in CPI data could weigh on the US Dollar, while stronger-than-expected figures might provide support.
- July’s CPI figures will be crucial in shaping rate cut expectations for the BoE’s September meeting. Headline inflation is expected to edge up to 2.3% y/y in July from 2.0% in June, which could support a more hawkish stance by the BoE. Stronger-than-expected CPI data may positively impact the Pound.
Thursday:
- The weekly jobless claims data is expected to show a slight increase to 235k from the previous 233k. Retail sales for July are also set to be released, with forecasts pointing to a 0.4% increase, up from a flat reading in June.
- The UK will publish preliminary GDP data for Q2, with the economy projected to have grown by just 0.1% q/q, down from 0.4% in the previous quarter.
- Japan’s GDP numbers for the second quarter are due on Thursday. The data is expected to show a growth of 0.6%, recovering from a negative growth of 0.5% in the previous quarter.
- This data will be pivotal for the Bank of Japan as it assesses whether the economy is strong enough to handle higher interest rates.
- China will release its Retail Sales and Industrial Production data. Retail sales are forecasted to increase slightly to 2.6% from 2%, while Industrial Production is expected to remain unchanged at 5.3%. These figures will be important in gauging the strength of China’s economic recovery.
- India Wholesale Price Index (WPI) inflation data is set to be released on Thursday. The previous reading was at 1.43%. The WPI figures will provide further insights into price pressures in the economy. That could weight on the Rupee.
Happy Trading!
Commodity Samachar
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