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Week Ahead – Eurozone Q2 GDP and UK jobs in focus

The euro is likely to come back into the spotlight next week after a lull in recent weeks. The Eurozone will see its first estimate of second quarter growth and UK unemployment data will also be closely watched, in addition to US retail sales and various industrial production data.

The week will get off to a quiet start with only inflation data from China likely to interest the markets. CPI data out on Sunday is expected to show Chinese inflation edging up to 1.5% in July. On Monday, Japanese trade data is due for the month of June. But a speech by Atlanta Fed President Dennis Lockhart could also get some attention.

German economic sentiment survey on Tuesday will be the main data of the day. The ZEW Economic Sentiment index is forecast to rise to 32.0 in August from 29.7 in the previous month. Also to watch are the NAB Business Confidence index in Australia for July and the second quarter unit labor costs in the US, which is expected to show a -0.2% change from the previous quarter.

On Wednesday, the Bank of Japan will publish the minutes from its latest monetary policy meeting and final industrial production figures for June are also out, which is forecast to stay unrevised at 0.8%.  More industrial production data is expected for China and the Eurozone. China’s industrial production is forecast to have risen by 6.6% in July from a year ago, down from June’s 6.8%. While retail sales for the same month are estimated to have risen by 10.6% over the year, unchanged from the previous month’s figure. Eurozone industrial production is expected to show a 0.1% increase in June month-on-month, an improvement over the 0.4% decline seen in May. In the US, the JOLTS Job Openings survey for June is forecast to show an increase over the month for June. But UK employment data is likely to be the main focus of the day. Last month’s surprise rise in the unemployment rate to 5.6% raised concerns that the UK jobs market is slowing. It’s expected to hold steady in June, though the claimant count is likely to rise again in July. Meanwhile, average earnings are estimated to have eased to 2.8% in June.

US data is expected to dominate Thursday as retail sales and initial weekly jobless claims data are released. Retail sales are forecast to grow by 0.5% month-on-month in July after a surprise 0.3% dip in June. But before that, Japanese machinery orders will also be watched, which is expected to show a 5.6% slump in June, though the year-on-year rise remains healthy at 16.4%.

Friday will be key for the Eurozone as the first estimate for second quarter growth is published. GDP is forecast to have expanded by 0.4% in the second quarter, as with the first quarter, with the year-on-year rate quickening to 1.3%. Recent data has pointed to a strengthening of the growth momentum across the Eurozone, including periphery countries, with the exception of Greece. Greek GDP out the previous day on Thursday is likely to show a year-on-year contraction of 0.3% in the second quarter. Final Eurozone CPI figures for July are also out the same day but no revision is expected to the initial reading of 0.2%. In the US, industrial production is estimated to have expanded by 0.3% during July, maintaining the same pace as in June. Ending the week will be the University of Michigan preliminary confidence index for August, which is estimated to show a slight improvement in the initial reading to 93.4 from 93.1 in July.

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