Upcoming events:
- Monday: Bank of Japan opinion summary, German IFO.
- Tuesday: Canadian CPI, US Consumer Confidence.
- Wednesday: Australia’s monthly CPI.
- Thursday: Japanese retail sales, US durable goods orders, US first quarter GDP final value, US unemployment insurance claims.
- Friday: Tokyo Consumer Price Index, UK Q1 GDP final value, Canadian GDP, US PCE, University of Michigan Consumer Sentiment Index (final value).
Tuesday
Canada’s CPI is expected to grow 2.6% year-over-year, up from 2.7% previously, while the month-over-month CPI is expected to grow 0.3% from 0.5% previously. The trimmed CPI is expected to grow 2.8% year-over-year, up from 2.9% previously, while the median CPI is up from 2.6% year-over-year.
In the previous report Underlying inflation measures have fallen to within the Bank of Canada’s 1-3% target range This gave the central bank the green light to cut interest rates for the first time, with markets now seeing a 67% chance of a further rate cut in July, though that will depend on CPI data due out this week.
Canada’s Inflation Strategy
The US consumer confidence index is expected to come in at 100, compared with the previous reading of 102. The previous report showed confidence improving after three consecutive months of declines. The Conference Board’s chief economist said: Strong labor market Consumers’ overall assessment of the current situation continued to strengthen.
Additionally, “fewer consumers expect the business environment, job opportunities, and income to worsen in the future.” Overall confidence index It has remained within a relatively narrow range for more than two years.The Current Situation Index will be worth keeping an eye on given that U.S. unemployment claims have recently come in lower than expected. This is generally Leading Indicators
Regarding unemployment rate.
US Consumer Confidence
Wednesday
Australia’s monthly CPI y/y is now expected to be 3.8% versus the previous 3.6%. As a reminder, the last report came in better than expected with underlying inflation measures remaining strong at higher levels. The RBA maintained a hawkish stance at its latest policy meeting, reiterating that “inflation is proving to be above target and persistent”, adding that “inflation is easing, but more slowly than previously expected”.
For this reason, the central bank is “not ruling anything out” and leaving all options on the table. Some improvement in inflation data is unlikely to cause a big change in the markets, but another disappointment could slightly increase the likelihood of a rate hike. The RBA is expected to keep interest rates on hold until mid-2025.
Australia Monthly CPI YoY
Thursday
US unemployment claims are one of the most important releases to watch each week as they are a timely indicator of the state of the labor market. Initial jobless claims are hovering near cycle lows, while continuing jobless claims are holding steady near the 1,800K level.
As participants become accustomed to these figures, the market reaction is becoming more and more muted. Data has started to fall short of expectations in the past two weeks However, it remains below the cycle high, which is something to note.
Initial jobless claims this week are expected to be 236,000 compared to the previous 238,000, and continuing jobless claims are expected to be 1,820,000 compared to the previous 1,828,000.
US unemployment claims
Friday
Core CPI for Tokyo is expected to be 2.0% year-on-year, up from 1.9% previously. Japan’s inflation rate is essentially at target, with no strong signs of re-acceleration. Raising interest rates will be difficult given Japan has been striving to achieve inflation for decades. Tightening policy could jeopardize this achievement. The Bank of Japan is expected to “significantly” reduce its bond purchases at its next policy meeting, so the data is unlikely to affect the bank.
Tokyo Core-Core CPI Year-on-year change
US Headline PCE is expected to be 2.6% YoY, up from the previous 2.7%, while MoM is up from the previous 0.3%. Core PCE is expected to be 2.6% YoY, up from the previous 2.8%, while MoM is up from the previous 0.2%. Forecasters can reliably predict PCE once the CPI and PPI are released, so the market already knows what to expect. This report won’t change anything for the Fed This is because the central bank will remain in a “wait and see” mode until at least September.
US Core PCE YoY