Investors have a plethora of event to focus on this week. First, the flash July PMI reports will be released. The preliminary estimates do a fairly good job anticipating the final readings. The tighter financial conditions and the cost-of-living squeeze translate into weaker economic momentum.
The European Central Bank (ECB) meeting is due on Thursday, and it may be the highlight of the trading week, but one should not discount the Bank of Japan (BOJ) decision due on the same day.
After all, if there is one currency that moved in 2022, it was the Japanese yen. It lost ground against all its peers and not only against the US dollar, meaning that the BOJ’s policy of controlling the yields had a generalized effect on the yen.
Europe also awaits anxiously to see if Russia resumes the flow of gas through the Nord Stream 1 pipeline on July 21, while Italy teeters on the brink of political turmoil should Prime Minister Mario Draghi go ahead and resign. This will affect the EUR for sure, so traders be ready!
The US and eurozone June composite PMI had nearly converged at 52.3 and 52.0, respectively. The UK’s composite PMI was at 53.7 and Japan’s at 53.0. In Bloomberg’s surveys, the median forecast sees a 45% chance the eurozone and UK are entering a recession in the next 12 months at 45%, and the US is slightly lower at 33%. Canada and Japan are at 25%.
Another jump in Canada’s CPI could help push market sentiment toward expecting another 75 bp hike at the Bank of Canada’s next meeting on September 7.
Canada also reports May retail sales. Canadian consumers have been shopping. In the first four months of the year, retail sales have averaged a monthly increase of 1.2%.
The UK’s inflation is running the fastest in the G7 at 9.1% in May (matched by the US in June). If the month-over-month rise is more than 0.5%, the year-over-year pace will increase. It might not matter much. The Bank of England had already warned that inflation will likely rise to 11% as the gas cap is lifted again. On the other hand, the UK will report June retail sales on July 22. It is reported in volume terms and has been simply horrible. They have fallen in six of the past seven months. In fact, April’s 0.2% increase was the first since the 0.1% rise in June 2021.
The BOE has persuaded the market that, like the Federal Reserve, it is willing to risk a recession if necessary to bring inflation back to its target.
Have your trading charts ready!
This Week’s High Impact Events
The times below are GMT +3.
Monday 18th July
12.00 – UK – MPC Member Saunders Speaks
Potential instruments to Trade: USD Crosses.
Tuesday 19th July
04.30 – Australia – Monetary Policy Meeting Minutes
Potential instruments to Trade: AUD Crosses.
Tentative – UK – BoE Gov Bailey Speaks
Potential instruments to Trade: GBP Crosses.
21.35 – US – FOMC Member Brainard Speaks
Potential instruments to Trade: USD Crosses.
Wednesday 20th July
02.10 – Australia – RBA Gov Lowe Speaks
Potential instruments to Trade: AUD Crosses.
09.00 – UK – CPI y/y
Potential instruments to Trade: GBP Crosses.
15.30 – Canada – CPI m/m
Potential instruments to Trade: CAD Crosses.
17.00 – US – Existing Home Sales
Potential instruments to Trade: USD Crosses.
Thursday 21st July
Tentative – Japan – BOJ Outlook Report, Monetary Policy Statement, & BOJ Press Conference
Potential instruments to Trade: JPY Crosses.
15.15 – Europe – Main Refinancing Rate & Monetary Policy Statement
Potential instruments to Trade: EUR Crosses.
15.30 – US – Philly Fed Manufacturing Index & Unemployment Claims
Potential instruments to Trade: USD Crosses.
15.45 – Europe – ECB Press Conference
Potential instruments to Trade: EUR Crosses.
Friday 22nd July
Tentative – New Zealand – RBNZ Statement of Intent
Potential instruments to Trade: NZD Crosses.
09.00 – UK – Retail Sales m/m
Potential instruments to Trade: GBP Crosses.
10.15 – Europe – French Flash Manufacturing & Services PMI
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