The US inflation data is anticipated next week and will have an impact on expectations for a rate hike by the Fed. The June Consumer Price Index (CPI) and Producer Price Index (PPI) will be made public on Wednesday and Thursday, respectively. The monthly CPI is anticipated to increase by 0.3%, the annual rate to decrease from 4.0% to 3.1%, and the Core CPI to decrease from 5.3% to 5.0%.
China will also release inflation data. Data on employment in the UK is expected on Tuesday. The Reserve Bank of New Zealand and the Bank of Canada will make their conclusions public on Wednesday in relation to recent central bank decisions.
Upcoming events of the week:
Monday – China CPI and BOE Gov Bailey Speaks
China’s CPI and Producer Price Index (PPI) data for June, which are likely to influence risk trades should the figures add to the signs of an economic slowdown in the world’s second-largest economy. China’s inflation numbers are forecast to hold steady at 0.2%
On the same day, Bank of England Governor Andrew Bailey will hold volatility. As he is due to participate in a panel discussion titled “Central banks as lightning rods for crises” at the Economic Meetings of Aix-En-Provence, in France.
Tuesday – U.K. Labor report
The British labour market report is to be released on Tuesday. The UK Unemployment Rate and the Average Hourly Earnings will be closely scrutinized for the BoE’s next interest-rates path. Average Hourly Earnings data will likely provide a decent picture of the country’s wage inflation. Labour and Unemployment rate numbers are expected to come unfavourable for the economy at 20.5K compared to a contraction of 13.6k and 6.8% from the 6.5% previous month’s reading.
Wednesday – U.S. Inflation and Canada Rate Decision
U.S. consumer price index rose at an annual rate, expected to stay at 3.1% in June compared to the previous month of 4.0% which would be the slowest increase since March 2021. It is anticipated that core CPI, which excludes volatile food and fuel costs, will rise at an annual rate of 5%, down from 5.3% in May but still higher than the Fed’s 2% objective.
The Bank of Canada is to hold its latest policy meeting at 7.30 pm. The forecast is to have another rate hike by 25-basis point rate hike by 5.00% from 4.75% after last week’s far stronger-than-expected jobs report indicated that the economy remains resilient.
The BoC raised rates to a 22-year peak of 4.75% last month amid concerns over persistent inflation after leaving them on hold since their last hike in January.
The Reserve Bank of New Zealand, which has already ended its cycle of tightening, is expected to keep rates on hold at its most recent meeting on Wednesday.
Adding to this, several central bank officials, RBA Gov Lowe, BOE Gov Bailey with Minneapolis Fed president Neel Kashkari, Cleveland Fed President Loretta Mester, San Francisco Fed president Mary Daly and Fed Governor Christopher Waller all making appearances, which could bring clutter during the week.
Thursday – U.K. GDP, US PPI numbers
On Thursday, data on the UK’s industrial production and monthly GDP will be released. GDP numbers are expected to have a contraction of 0.3% compared to an expansion of 0.2%. At the same time, Construction Output m/m, Goods Trade Balance Industrial Production m/m, and Europe Industrial Production m/m are also set to release.
Further, US PPI inflation data and the weekly Jobless Claims are set to release.
Friday – Prelim UoM Consumer Sentiment
Preliminary US University of Michigan (UoM) Consumer Sentiment and Inflation Expectations for July are set to be released. Consumer sentiment expects to expand by 65.5 from 64.4.
Signs of continued strength in consumer sentiment could indicate that the U.S. economy can avoid a severe recession despite the Fed’s aggressive tightening.