It’s another action-packed week with all manner of risk events to spice up market volatility.
The key data release will be the latest US inflation numbers which are the last major data point before the FOMC meeting at the end of this month.
The US CPI’s release will be nestled amongst these major economic data releases and events:
Monday, July 10
- CNH: China June CPI and PPI
- GBP: Speech by Bank of England Governor Andrew Bailey
- USD: Speeches by San Francisco Fed President Mary Daly, Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic
Tuesday, July 11
- AUD: Australia June household spending; July consumer and business confidence
- EUR: Germany July ZEW survey; June CPI (final)
- GBP: UK June jobless claims; May unemployment
- USD: Speech by St. Louis Fed President James Bullard
Wednesday, July 12
- JPY: Japan June PPI
- NZD: RBNZ cash rate decision
- CAD: Bank of Canada rate decision
- USD: US June CPI; Fed Beige Book; “Fed speak”
Thursday, July 13
- AUD: Australia July consumer inflation expectations
- CNH: China June external trade
- EUR: Eurozone May industrial production
- GBP: UK May monthly GDP, industrial production
- USD: US weekly jobless claims; June PPI; speech by Atlanta Fed President Rafael Bostic
Friday, July 14
- JPY: Japan May industrial production (final)
- USD: US July consumer sentiment and inflation expectations
- SPX500_m: Wall Street banks release quarterly earnings (JPMorgan, Wells Fargo, Citigroup)
Money markets have nailed on a 25bp rate hike in a couple of weeks’ time and give around a 40% chance of at least another 25bp move by the November meeting.
Bets were taken off the table after Friday’s slightly softer US labour market report when this was closer to a 50/50 possibility.
The resilience in recent economic data has come thick and fast in recent weeks.
Markets will focus on the core inflation print as the softer headline inflation will chiefly be down to base effects.
Remember that hot CPI readings from June 2022 will now be dropping out of the 12-month calculation.
Any weakness in the core CPI below the market-forecasted 5% year-on-year print should see the USD Index test the June lows and support around 102.
GBPUSD to hit fresh 2023 high?
Tuesday’s UK jobs data will be important for the Bank of England which meet at the start of August.
Aside from next week’s CPI data, this is a key release for policymakers due to the stickiness in UK price pressures.
A 25bp rate hike is baked into next month’s meeting, with a near-80% chance of a 50-basis point hike.
Continued strong wage growth will push the dial towards another bigger half-point move.
GBP has been benefiting from more aggressive rate expectations, already the best-performing G10 currency against the US dollar so far in 2023 with year-to-date gains of about 6%.
A stronger-than-expected showing by the US labour market could finally push GBPUSD past 1.2850 and onto its highest levels since April 2022.
