Wednesday is the most important day on the Australian economic calendar this week, with the release of CPI data for the June quarter followed by a speech from RBA Governor Philip Lowe.
Internationally, this week’s key data points will be led by the US Federal Open Market Committee’s (FOMC) offical interest rate announcement on Wednesday night, with analysts forecasting no changes to the current rate.
This Friday after markets close, the US also has Q2 GDP figures with Bloomberg’s consensus forecast for annual growth ranging between 2.2% and 2.9%.
After almost breaking through US80c towards the end of the week, the Aussie dollar moved lower in overnight trade on Friday to finish the week at 0.7915.
US stocks traded flat on Friday, while the US dollar index fell below 94 for the first time since April 2016.
That helped push the euro to a 2-year high against the greenback, which had a negative effect on European stocks as the Euro STOXX600 index fell by more than 1%.
Falls were led by the German market, which dropped by 1.6% as the markets assessed the effects of a stronger currency amid the first indications of a shift in monetary policy by the European Central Bank.
Wednesday’s CPI data is scheduled for 11:30am AEST. It’s always of central importance and can often be the catalyst for significant moves in markets and even changes to monetary policy.
This useful primer by David Scutt will help you get across Wednesday’s data release. CPI for the March quarter came in slightly softer than expected, but analysts predict that for the June reading, annual headline inflation will increase to 2.2%.
Underlying (core) inflation is expected to rise by 1.75% from this time last year, in line with the RBA’s recent forecast and still below the bank’s stated core inflation target of 2-3%.
CPI data will be followed on Wednesday by Governor Lowe’s speech at 1:05pm AEST, titled “The Labour Market and Monetary Policy.”
Lowe’s speech will be closely watched by markets, given the recent strength in the Aussie dollar which has been partly driven by a shift in the market’s expectation for when the RBA will raise interest rates.
The market’s timeline for the next interest rate rise has now been pushed forward to the middle of next year, although Lowe’s speech follows comments from deputy governor Guy Debelle on Friday which tempered expectations around a shift in the RBA’s thinking towards interest rate settings.
On Thursday at 11:30am AEST the ABS releases the International Trade Price Index, showing the total value of exports and imports for the June quarter. Export prices are expected to decline in Q2 due to the fall in commodity prices, after rallying strongly in Q1.
Here’s the schedule of Australian data releases for this week (via Commsec):
Key data internationally kicks off on Monday night with composite (both manufacturing & services) PMI data for the Eurozone in June.
The UK has Q2 GDP on Wednesday, with a forecast annual rise of 1.7%. Also on Wednesday night is the FOMC’s interest rate announcement in the US.
That’s followed by the US Q2 GDP data on Friday, along with the Q2 CPI inflation data for Japan.
Despite the Bank of Japan’s recent pledge to maintain easy monetary policy, Japan’s battle against low inflation is expected to continue with a forecast quarterly increase of just 0.2%.
Here’s the international calendar (also via Commsec):