A week of reports and speeches ahead

World Markets

This week we will see the release of many reports from all three major Central Banks, as the last few days of June and the start of July will bring about the usual burst of significant data.

President of the ECB Christine Lagarde is expected to have a speech every day Monday through Thursday to discuss the released data. Bank of England Governor Bailey is expected to speak on Wednesday as UK GDP Growth Rate reports will be released on Thursday. We will also see the release of Nationwide Housing Prices and BoE Consumer Credit reports on Thursday & Friday. The US is expected to have a packed week with multiple speeches from the FED, including FED Chair Powell on Wednesday. House Price Index, GDP Price, Growth & Sales are all expected to be handed to the public on Tuesday & Wednesday.

The Pound had an average display of strength last week, finishing slightly stronger against both the USD & EUR. The pound had some rather tricky data reports to navigate last week with UK inflation and retail data. Inflation was reported at a staggering 9.1%, up 0.1% from the April print. On Friday, we saw disappointing UK retail sales data with a decline in growth by -4.7%. Price action was relatively unphased as the cost-of-living squeeze is priced in.

The economic calendar is filled with high-impact events in the coming week focusing on inflation from both the U.S. and EU. EU inflation is expected to hold at 3.8%, but anything higher could trigger hawkish ECB bets and potentially push the euro higher. The aggressive outlook from the Fed is likely to negate any significant euro gains in the coming weeks. A series of important appointments for the Euro including Spanish and German inflation figures on Wednesday, which will inform market expectations for Friday’s Eurozone numbers, and retail sales data from Germany on Thursday. Economists and financial markets will be looking to see if April’s -5.4% month-on-month decline in German retail sales deepened last month and this point, along with the inflation data out on Friday, potentially has the ability to further impact expectations for ECB interest rates in the months ahead. Thursday’s German retail sales number will offer important insight into how Europe’s largest and generally most resilient economy is faring amid the commodity price shock but equally important will be whether this Friday’s Eurozone inflation figures follow in the direction of the UK’s and other central banks.

With the latest FED rate hike now in the rear-view mirror, the US Dollar fell for the first time in four weeks, dropping by -0.26%. EUR/USD rates increased by +0.61% while GBP/USD rates gained +0.44%. Many eyes will be watching the FEDs movements closely this week in anticipation of the data release, as the USD remains the current stable currency in a world of economic unease. Chairman Powell merely reiterated remarks already made in the press conference following June’s decision to lift the Fed Funds rate by a large 0.75% increment, taking it up to 1.75%, although they had a much more palpable impact on stock and bond markets last week than on their first iteration. All of this leaves a lot to be determined this week by the flurry of important economic figures due from the U.S. over the coming days, which includes the May edition of the Fed’s preferred measure of inflation; the Core Personal Consumption Expenditures Price Index. Consensus expects the Core PCE Price Index to rise by 0.4% for last month, up from 0.3% previously, but to fall from 4.9% to 4.8% in annual terms.