Weekly Market Outlook: Inflation & Jobs Dominate

The economic calendar for the week ahead will see the inflation and the jobs report dominating the markets. Various economies are expected to release their respective inflation data while Australia and the UK will also be releasing their monthly jobs report.

In terms of central bank meetings, this week, they are expected to take a backseat. But the inflation data could very well shape the expectations of the central bank’s forward guidance for the respective economies.

A somewhat slower week from the US is expected. Only the retail sales report will be the big-ticket item this week. Retail sales in the US are expected to rise at a slower pace compared to May. Still, the expectations are for an increase. If retail sales match or beat estimates, it would mark a third consecutive monthly gain in retail spending.

Data from the UK will cover the jobs, inflation, and retail sales numbers. The rather busy week will provide a glimpse into the UK economy. Inflation is expected to rise at a pace of 1.7% on the year ending June. The average earnings are expected to maintain a 3% increase.

Data from the eurozone will focus on the final inflation figures for June. Economists expect headline inflation to rise by 1.2%. This marks the same pace of increase as signaled during the flash estimates. The core inflation rate in the eurozone is, however, expected to slip to 0.8% against the initial estimates of a. 1.1% increase.

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

New Zealand Inflation in Focus

This week will see the release of the quarterly inflation report from New Zealand. The data, due to be released by Statistics New Zealand, is forecast to rise 0.6% on the quarter ending June 2019. This follows a 0.1% increase in the first quarter of the year.

The gains in the consumer prices are expected to come on the back of higher fuel prices seen during the period. Energy prices were seen rising as much as 6.0%. This is expected to contribute to higher headline inflation.

However, the data is unlikely to change the sentiment as far as interest rates are concerned. On an annualized basis, New Zealand’s inflation rate is set to remain within 1.5% – 1.7%. This brings inflation somewhat closer to the RBNZ’s inflation target rate.

The inflation data comes after the RBNZ had cut rates earlier. This is expected to help push prices higher. But when considering prices excluding energy and food, New Zealand’s inflation rate is expected to remain largely flat.

Still, a 0.6% increase on the quarter is expected to bode well for policymakers at the RBNZ. Inflation is expected to get a boost from higher housing and food prices. Statistics New Zealand is also expected to make some changes to the way rents are calculated. This price increase in rents is expected to add about 0.1% to the overall inflation data.

Inflation: UK, Eurozone & Canada

Inflation reports from the UK, eurozone, and Canada are on the cards this week. The inflation report will potentially signal how consumer prices are rising in some of the key developed markets.

The UK’s headline inflation is forecast to rise at a pace of 1.7% in June on a yearly basis. This marks an unchanged print of the 1.7% inflation rate that was registered in May.

For the eurozone, the major surprise could come from the core CPI. Economists forecast core CPI to rise just 0.8%. The data comes as ECB President Draghi previously signaled the ECB’s willingness to do more if inflation eases further.

Finally, the inflation report from Canada will be another key report to watch for. While the BoC is on hold, inflation is expected to firmly anchor around the 2.0% inflation target rate. Forecasts show that inflation could rise by 2.1% for Canada.