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July 12, 2021

The Week Ahead: Central Banks & Waaay More!

Bart Kurek

Let's look at the news event's we've got lining up this week...

(USD) CPI

The USD Consumer Price Index (CPI) report is releasing on Tuesday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Analysts expect headline inflation to dip from 0.6% to 0.5% in June, while the core version could slide from 0.7% to 0.4%. We should see big volatility around this event as USD bulls are waiting for more signs that the Fed could taper stimulus soon.

(NZD) RBNZ Monetary Policy Report

The Reserve Bank of New Zealand (RBNZ) Monetary Policy Decision meeting is on Wednesday, and it's expected that no actual interest rate changes are due.

Previously, RBNZ Governor Orr mentioned that the economy is returning to pre-pandemic levels, hinting that the monetary policy may be adjusted soon. So any further hawkish remarks from the RBNZ could boost tightening expectations.

(CAD) BoC Rate Statement

The Bank of Canada (BoC) is the central bank of Canada which is responsible for the stability of the Canadian Dollar currency, full employment, and economic prosperity and welfare of the Australian people. This is the primary tool the BoC uses to communicate with investors about monetary policy, as they discuss the economic outlook and offers clues on the outcome of future decisions.

The BoC is expected to keep interest rates on hold at 0.25% for the time being, as they have already reduced its asset purchases in the previous statement. Some analysts are still expecting to see another reduction in QE, potentially slowing the pace of purchases from C$3B to C$2B per week. Moreover, updated economic projections are also due, and should give CAD traders clues on the timing of the BoC's potential rate hike.

(AUD) Employment Change

The Employment Change report is a measure of the change in the number of employed people in Australia. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.

Following the impressive 115.2k increase last month in job hiring, analysts are expecting Australia to print a slowed 20.3k rise in employment for June, which should be enough to bring the unemployment rate down from 5.1% to 5.0%. It's recommended you pay attention to full-time and part-time hiring numbers.

(NZD) CPI

Analysts are expecting a slight dip in price pressures in Q2, and the reading could fall from 0.8% to 0.7% which isn't a major difference but still shows negative results. Stronger than expected results could keep market participants hopeful that the RBNZ is bound to tighten policy soon.

(JPY) BoJ Outlook Report

After several cities in Japan have declared a state of emergency due to fresh outbreaks, the Japanese central bank is expected to sit on its hands and keep policy unchanged. The BoJ is expected to slash its economic forecasts, confirming its nowhere close to reducing stimulus.

(USD) Retail Sales

The USD Retail Sales Report is set to Tuesday which shows the total value of sales at a retail level. Consumer spending accounts for a majority of economic activity, and therefore when citizens spend, it is a sign that people have jobs, people are making money, and people are able to spend money for whatever it is they want.

Analysts expect to see a 0.5% decline in the USD Retail Sales after the earlier 1.3% slump. The Core reading is set to rebound by 0.4% after the previous reading at 0.7%. This report will likely paint a mixed picture of consumer spending, so I suggest looking at the data once released before making any trading decisions.

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