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    Week Ahead – Focus on Greek referendum but industrial output should also draw attention

    Important data scheduled to come out next week run the risk of becoming overshadowed by the outcome of Greece’s referendum on the bailout program. Key data on industrial production, trade balance and employment could get sidelined whatever the outcome of the referendum. Negotiating efforts are likely to get stepped up as both the Eurozone and the ECB will be faced with a dilemma if the outcome is a “No”. While a “Yes” vote could lead to political instability as the Syriza-led government will come under pressure to resign.

    The United States will see a number of indicators released during the week. Services PMI is out on Monday and is expected to show a marginal increase in activity from 54.8 to 54.9 in June. The ISM non-manufacturing composite is also out the same day and is forecast to improve to 56.3 in June from 55.7. Trade balance figures out on Tuesday are expected to reveal a worsening deficit to USD 42.8 billion in May, while Thursday will see the release of the weekly initial jobless claims. The main mover for the dollar will be Wednesday’s FOMC minutes but potentially so will Fed Chair Janet Yellen’s speech on US Economic Outlook on Friday. As recent data continues to point to only a moderate recovery, putting the likelihood of a September rate hike in doubt, analysts will be looking for clues on the Fed’s intentions.

    For the Eurozone, German data will dominate, starting with factory orders on Monday, which is expected to show a monthly decline of 0.4% in May. German industrial production figures on Tuesday are also forecast to be weak, rising by just 0.1% in May. Friday will also see French and Italian industrial production data. More German data is due on Thursday with the release of trade figures.

    The Bank of England will hold its monthly monetary policy meeting on Thursday, though with no change in policy expected, the pound is more likely to be swayed by industrial production figures out on Tuesday. UK industrial production is estimated to have shrunk by 0.2% in May month-on-month, while manufacturing production is forecast to have fared better, expanding by 0.1% on the month, giving an annual increase of 1.8%. On Friday, trade data is expected to show that Britain’s trade deficit deteriorated to GBP 9.8 billion in May.

    The Reserve Bank of Australia will also hold its policy meeting next week with rates expected to stay unchanged when it meets on Tuesday. The aussie’s recent decline would give the RBA less reason for another cut, especially given the overheating Sydney housing market. Unemployment data out on Thursday will also be closely watched.

    In other data, Japan’s current account for May is published on Wednesday. The current account is estimated to have increased from JPY 1.32 trillion to JPY 1.54 trillion, while machinery orders are forecast to decline by 5% on Thursday. Unemployment data for Canada could put pressure on the Bank of Canada as it is expected to add to the recent weakening outlook for the Canadian economy. The unemployment rate is expected to rise to 6.9% in June when released on Friday. Finally, inflation in China is forecast to pick up slightly in June to 1.3% year-on-year from 1.2% when published on Thursday.

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