EU Summit eyed ahead of busy week which includes ECB and Yellen

All eyes will remain firmly fixed on Greece ahead of the start of the new trading week. On Sunday all 28 members of the European Union are due to meet in Brussels to decide Greece’s fate. Meanwhile after the Greek government submitted reform proposal to its creditors’ late on Thursday, several steps have to be taken now to see if they are approved by the Greek parliament, Eurogroup, ahead of the EU Summit. Other important events include the European Central Bank meeting and UK jobs data as well as Fed Chair Janet Yellen’s testimony.

In terms of data releases on Monday, Japan publishes revised industrial production figures for May. This data is not a major data point though. The US then releases the Federal Budget Balance.

On Tuesday, Australian NAB business confidence will be important for the Australian dollar. Focus will then shift on the more important UK inflation data and the German ZEW economic sentiment survey. In April, the UK fell into deflation for the first time since data were first compiled in 1989, but consumer prices rebounded in May. Inflation is likely to have remained in positive territory in June but there remains uncertainty as to the extent to which it might take off later this year, with important implications for both economic growth and interest rates. US Retail sales numbers will provide policy makers with additional information on the health of the US economy, after sales surged 1.2% in May.

On Wednesday China publishes second quarter GDP data. Recent PMI data raise the possibility of economic growth having slowed further from the 7.0% annual pace seen in the first three months of the year. If GDP growth slows further, the Chinese government could fail to meet its growth target of 7.0% for 2015, which would be the slowest expansion for a quarter of a century. Chinese equity markets could see further volatility.

The Bank of Japan issues a statement on monetary policy on Wednesday but the highlight of the day will the UK employment report. There’s also a strong chance that the UK unemployment rate will fall to 5.4% from 5.5%, adding to signs of a tightening labour market. Wage data will also be in focus and will be important in gauging the future path of UK interest rates.

In the US session on Wednesday Fed Chair Janet Yellen is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC. Her speech is usually important to watch, to look for any clues on the Fed’s economic outlook and timing of the first rate hike.

On Thursday, inflation and trade data are updated in the Eurozone and the European Central Bank announces its latest monetary policy decision. It is expected that the ECB will keep its foot firmly on the stimulus pedal. Meanwhile Eurozone inflation data are also out on Thursday. Consumer prices rose at an annual rate of 0.2% in June according to flash data, in what is a strong turnaround from the 0.6% rate of decline seen at the start of the year.

From the US on Thursday, initial jobless claims numbers and the NAHB Housing Market Index will be released.

On Friday, focus will be on US inflation data and the University of Michigan consumer sentiment index. Inflation data in the US will also provide an important steer to US policymaking. Core inflation dipped to 1.7% but any renewed shift towards 2% raises the chance of the FOMC hiking rates later this year.

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