It’s a big week on the data and event front, with the Federal Reserve policy meeting on Wednesday the highlight. The US will also release labour market data for June (on Friday), as well as PCE inflation, consumer confidence and ISM manufacturing figures.
The Eurozone, Switzerland and Australia are all due to release important CPI-inflation numbers, with preliminary Eurozone data for Q2 GDP also out tomorrow. The data calendar is light in the UK and New Zealand, with the Bank of England’s policy meeting on Thursday likely to play second fiddle to the politics of Brexit.
Monday 29th July
No tier one data or events
Tuesday 30th July
Switzerland: KOF leading indicator (July). Economic growth remained lacklustre in Q2 in Switzerland and analysts forecast that it remained weak in July, with the KOF leading indicator expected to have slowed further from a 3-month low of 93.8 in June.
United States: Personal income, spending and prices (June). The focus will likely be on the core PCE price index, one of the measures of inflation which the Federal Reserve closely tracks. It has fallen from 2.0% yoy in January to 1.6% yoy in May, which has arguably contributed to the Fed’s more dovish tone in recent months. Analyst forecast that core PCE inflation rose slightly to 1.7% yoy in June.
United States: Conference Board consumer confidence (July). After two months of improvements, consumer confidence tanked to 121.5 in June, its lowest level since September 2017. This may well hold back retail sales growth in coming months.
Australia: CPI-inflation (Q2). Headline consumer prices were flat in Q1, the weakest rate of quarter-on-quarter inflation in three years, with year-on-year inflation collapsing to 1.3% yoy from 1.8% yoy in Q2 which prompted the RBA to cut its policy rate twice in quick succession. Analysts forecast that headline CPI-inflation rebounded to 0.5% qoq in Q2, which if correct may put further RBA rate cuts on hold for now.
Wednesday 31st July
Eurozone: German retail sales, labour market data (June)
Eurozone: CPI-inflation (July, preliminary data). Headline CPI-inflation in June was 1.3% yoy, at the low-end of an 18-month range of 1.2-2.2% yoy range. This weakness in inflation has contributed to the ECB becoming increasingly dovish although it has so far stopped short of cutting its policy rates and/or re-starting its QE program.
Eurozone: GDP (Q2). GDP growth in the Eurozone doubled to 0.4% qoq in Q1 but from a low base and analysts forecast that it slowed back to 0.2% qoq in Q2. If accurate, such a slow pace of growth – equivalent to only 1% yoy – will add to the pressure on the ECB to ease monetary policy.
United States: ADP non-farm employment (July). Employment in the private sector rebounded in June, following a very weak May print. Analysts forecast a further improvement in this non-official measure of private sector employment in July ahead of the release of official labour market data on Friday.
United States: Federal Reserve policy meeting and press conference. All eyes will be on this much-awaited and discussed policy meeting. The consensus forecast is that the Fed will deliver a 25bp cut, in line with market pricing, although some analysts think there is a (slim) possibility of either a 50bp cut or no change at all. Assuming the Fed cuts its policy rate 25bp to 2.00-2.25%, the question will be whether this is a “one-off insurance policy” or the beginning of a longer easing cycle. The market is currently pricing in the latter (specifically a total of three rate cuts before year-end) so Fed Chairperson’s Powell will be key.
Thursday 1st August
Switzerland: National holiday
United Kingdom: Bank of England policy meeting. The nine-member Monetary Policy Council will in all likelihood once again keep its policy rate unchanged at 0.75% with markets focussing predominantly on newly-appointed prime minister Johnson’s stated intention to take the UK out of the EU on 31st October, with or without a deal.
United States: ISM manufacturing PMI (July). This measure of economic activity in the US manufacturing sector fell to 51.7 in June, its lowest level since October 2016, which contributed to GDP growth slowing to a seasonally-adjusted annualised rate of 2.1% qoq in Q2 from 3.1% in Q1. Analysts forecast only a modest rebound in the PMI to 52.0 in July, pointing to little or no pick-up in US GDP growth in early Q3.
Friday 2nd August
Switzerland: CPI-inflation (June). Headline CPI-inflation remained at the bottom of its year-to-date range of 0.6-0.7% yoy in June, which along with Swiss Franc strength has led to speculation that the Swiss National Bank may cut its policy rate ahead of the ECB.
Eurozone: Retail sales (June).
United States: Labour market data (July). The increase in employment in the non-farm sector tripled in June to 224,000 while average hourly earnings growth was steady at 3.1% yoy. The resilience of the US labour market has cast doubts on whether the Fed should be even thinking of cutting its policy rate although analysts forecast that non-farm payrolls increased by only 160,000 in July.
