The highlight this week will the Fed’s policy meeting, press conference and updated forecasts on Wednesday, while the Empire State and Philly Fed manufacturing indices will provide the first indications of how US GDP growth fared in June. In the UK, the focus will be on the ongoing race for the premiership, while outside of Brexit-politics the release of CPI-inflation and retail sales data and MPC policy meeting will colour the macro backdrop. In the Eurozone, ECB President Draghi is due to speak ahead of the release of preliminary composite PMI data for the Eurozone on Friday.
Monday 17th June
United States: NY Empire State manufacturing index (June). This will be one of the first major data releases for June and provide an early indication of how GDP growth fared in Q2. The index of manufacturing activity staged a strong recovery in April and May but analysts expect it to have moderated from 17.8 in May to 11.0 in June. Nevertheless this would still point to decent US GDP growth in Q2 following on from 3.1% qoq annualised in Q1.
Eurozone: ECB President Draghi to speak ECB at forum on central banking. FX markets had until last week responded positively to the ECB’s more dovish stance but following last week’s Euro-sell-off there will be renewed focus on how the ECB intends to shore up Eurozone growth and inflation.
Tuesday 18h June
Australia: RBA policy meeting minutes release. Markets and analysts seemingly disagree on the odds of the RBA cutting its policy rate 25bp in the next couple of months and will therefore be looking to the RBA meeting minutes for clues as to which side of the fence the RBA currently sits on.
United Kingdom: Second ballot for Conservative Party leadership (result due at 18.00 London time). There are six candidates left vying to replace Theresa May as leader of the ruling Conservative Party and prime minister, with former foreign secretary Boris Johnson the front-runner. Out of the ten original candidates, three were eliminated in the first ballot last Thursday and one dropped out. In the second internal ballot, any candidate receiving fewer than 10% of the votes by Conservative Party MPs (i.e. 32) will be eliminated with the remaining candidates due to take part in a televised BBC debate at 20:00 and go onto a third ballot on 19th June.
Eurozone: German ZEW economic sentiment (June). This gauge of the 6-month economic outlook has treaded water since February around zero, suggesting that German GDP growth in Q2 may have not accelerated much from 0.4% qoq in Q1.
United States: Building permits and housing starts (May).
United Kingdom: Bank of England Governor Carney to speak. A number of MPC members last week suggested that a rate hike was possible regardless of the Brexit outcome and Governor Carney has recently argued that markets were under-pricing the odds of a rate hike. Markets have so far paid scant attention on the basis that weak GDP growth, stable inflation and Brexit-related uncertainty do not make a compelling case for a tightening of monetary policy.
New Zealand: Current account (Q1)
Wednesday 19th June
United Kingdom: Third ballot for Conservative Party leadership (result due at 18.00 London time). The candidate who receives the fewest number of votes by Conservative Party MPs will be eliminated. If there are still more than two candidates left, there will be a third and potentially fourth ballot on 20 June. If there are only two candidates left, Conservative Party members (around 150,000) will vote in coming weeks to elect their party leader, with the winner due to be announced in the week of 22 July.
United Kingdom: CPI-inflation (May). Core CPI-inflation has been stuck at 1.8-1.9% yoy since September but analysts expect it to have moderated to 1.7% yoy in May. Would at the margin further argue against the Bank of England hiking rates near-term.
Eurozone: ECB President Draghi to speak
United States: Federal Reserve policy meeting, press conference and updated forecasts. Chairperson Powell has stuck to his “wait-and-see” approach and the consensus forecast is that the Fed will indeed keep its policy rate unchanged at 2.25-2.50%. However, a number of FOMC members have in recent weeks made the case for a rate cut, markets are pricing an 88% probability of a 25bp rate cut at the July meeting and some analysts expect today’s meeting to lay the ground for a 25bp cut next month. It is certainly conceivable that the accompanying Fed statement and updated “dot chart” (of FOMC members’ expectations) will have a more dovish bias. This tension between the Fed’s position, market pricing and analysts’ forecasts has buffeted the Dollar and volatility could spike on Thursday.
New Zealand: GDP (Q1). GDP growth doubled to 0.6% qoq in Q4 2018, a decent pace of growth compared to other developed economies, and analysts forecast an unchanged 0.6% qoq in Q1 2019.
Thursday 20th June
United Kingdom: Possible fourth and fifth ballots for Conservative Party leadership (results due to be announced at 13:00 and 18.00, respectively, London time). The candidates who receive the fewest number of votes by Conservative MPs will be eliminated, leaving only two candidates who will go through to a Conservative Party membership vote to be held in about a month’s time.
Australia: RBA Governor Lowe to speak
Switzerland: Trade balance (May). The rise in the Swiss trade surplus year-to-date has likely provided some support for the Swiss Franc but the currency has been treading water for the past fortnight.
United Kingdom: Retail sales (May). The volume of retail sales was unchanged in April following a very strong Q1 .The BRC retail sales monitor pointed to a weak month of May and analysts forecast a 0.5% mom contraction.
United Kingdom: Bank of England policy meeting. The consensus forecast is that all nine MPC members will vote in favour of keeping rates unchanged at 0.75% but it is conceivable that members Haldane and Saunders and could dissent in favour of a 25bp rate hike.
United States: Philadelphia Fed Manufacturing Index (June).
Friday 21st June
Eurozone: Composite PMI (June, preliminary data). This indicator of economic activity in the manufacturing and services sectors inched up to 51.8 in May from 51.5 in April but analysts forecast a range-bound 51.6 in June
United States: Existing home sales (May).
United States: FOMC members Brainard, Mester and Daily to speak. With the Fed black-out period over, FOMC members will once again be hitting the airwaves.
