Weekly Market Outlook: GDP & RBNZ Meeting

The week ahead will see the GDP themes dominating the news wires amid a somewhat slow week.

Various economies will be releasing their respective GDP figures this week, including the US, UK, and Canada.

The RBNZ’s monetary policy meeting will be held this week. No changes are expected to the official cash rate at this week’s meeting.

Data from the eurozone will see the flash estimates on inflation coming out. The data which covers the month of June is forecast to show that inflation grew at the same pace as the month before. Headline CPI is forecast to rise 1.2% on the year while core CPI is forecast to rise 1.0% on the year in June.

Given the fact that ECB President Draghi commented on the dovish policy from the central bank, this week’s inflation report from the eurozone will be closely watched.

GDP data from the US is forecast to show no change, as are the second revised GDP estimates from the UK. Canada’s monthly GDP data is forecast to show a 0.2% increase in growth. This marks a slower pace of increase compared to 0.5% in the month before.

Here’s a quick recap of what’s to come in the currency markets this week.

RBNZ Monetary Policy Meeting

The Reserve Bank of New Zealand will be holding its monetary policy meeting this week early Wednesday. No changes are expected to the official cash rate which is projected to remain steady at 1.50%.

The basis for this view comes as the RBNZ cut rates at its meeting in May.

The markets are currently expecting to see the RBNZ lower interest rates once more in August this year. Thus, investors will be looking closely to the RBNZ’s monetary policy statement. This comes as recent economic data saw New Zealand’s GDP advancing 0.6% on the quarter.

While the GDP expansion in Q1 was in line with estimates, the annualized growth rate was at just 2.5%. But this is still lower comparing to 2016’s highs of 4.0% GDP expansion.

Business investment has declined, however, with investment in equipment turning flat over the year. With China bearing the brunt of the US tariffs, the slowdown in China will be affecting New Zealand and Australia as well, some of its closest trading partners.

Ahead of the RBNZ meeting, New Zealand’s trade balance figures will be coming out. Forecasts point to a headline print of 200 million, down from 433 million previously. Later in the week, the ANZ Business confidence survey report will also be coming out.

Business confidence slipped to -32 previously and this decline could continue into the latest survey.

US Q1 GDP Final Estimates

The first quarter final GDP estimates will be released this week. Economists forecast no change and expect the US economy to maintain a growth rate of 3.1% in the first 3 months of the year.

This marks an unchanged print compared to the second estimates. However, given the recent data about the current account gap narrowing, there is scope for the GDP to be tweaked somewhat higher.

Besides the GDP report, other important events over the week include a speech by Fed Chair Jerome Powell. Powell will be speaking after the Fed opted to hold rates steady at its meeting last week.

The US personal spending and income data are also due this week. Economists forecast personal spending to rise by 0.2%, which marks the same pace of increase as the month before. Personal income is, however, forecast to rise 0.5%, advancing from the 0.3% increase registered previously.

The week concludes with the University of Michigan’s inflation expectations and consumer sentiment report. Consumer sentiment is expected to dip softly to 97.4 from 97.9 previously. Inflation expectationscurrently stand at 2.6%.

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About the Author
“John Benjamin Resident Analyst at Orbex. John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.” [space height="10"] At Orbex, we are dedicated to serving our clients responsibly with the latest innovations in forex tools and resources to assist you in trading. Please Director at Visit our site for more details.

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