Week Ahead

Markets will continue to monitor the impact of the pandemic on the economy amid signs of second waves of infections.

Elsewhere, US Fed Powell’s testimony to House of Representatives and FOMC policy meeting minutes will be keenly watched. Data to follow include US jobs report, factory orders and foreign trade; UK final GDP figures and consumer confidence; Eurozone inflation and business survey; Germany retail trade; China PMI updates from both the NBS and Caixin; Japan’s tankan quarterly survey, retail trade and industrial output; Australia trade balance and retail sales; and worldwide manufacturing and service sector PMI surveys for June.

In the US, Federal Reserve Chair Jerome Powell’s testimony before the Committee on Financial Services and the FOMC minutes will be keenly watched in the coming week amid hopes that they might clarify policymakers’ views on the monetary policy path. Early this month, the Federal Reserve suggested interest rates will remain at current levels through 2022 as the economy recovers from its deepest economic crisis ever due to the coronavirus crisis.

On the economic data front, the US jobs report for June is expected to show a payroll increase of 3.0 million, following a 2.5 million rise in May and a record 20.5 million slump in April; while the unemployment rate is seen falling to 12.3 percent, moving further away from an all-time high of 14.7 percent hit in April. Other notable publications are the ISM Manufacturing PMI survey, foreign trade balance, factory orders, construction spending, ADP employment change, pending home sales, Case-Shiller home prices, Chicago PMI, Dallas Fed Manufacturing Index, and the final reading of Markit Manufacturing PMI.

US stock markets will be closed on Friday for Independence Day.

Elsewhere in America, key data to follow include Canada monthly GDP, trade balance and Markit Manufacturing PMI; Brazil jobless rate, industrial output, foreign trade and Markit PMIs; and Mexico business and consumer morale.

The UK will publish the final estimate of first-quarter GDP, alongside Gfk consumer confidence, monetary indicators, current account and Nationwide housing prices. Flash figures showed Britain’s economy contracted by the most since the fourth quarter of 2008, with household consumption dropping at the fastest rate in 11 years due to the effects of social distancing measures.

Elsewhere in Europe, the Eurozone’s consumer price data for June will probably show inflation remained at a four-year low as consumption remains under pressure amid the pandemic. At the same time, the Eurozone, Germany and France will publish their final estimates of Markit PMIs while many other countries like Spain and Italy will release flash readings. Market players will also keep an eye on the Euro Area business survey, unemployment rate and producer prices; Germany retail sales and jobless; Spain unemployment change and business sentiment; Switzerland KOF economic barometer, retail trade and consumer prices; and Turkey foreign trade and inflation data. Sweden’s central bank will be deciding on interest rates, but no changes are expected.

In China, investors will turn their attention to June’s PMI updates from both the NBS and Caixin, with forecasts pointing to a slowdown in factory activity as the country tries to recover from the coronavirus crisis. Meanwhile, the Bank of Japan’s tankan quarterly survey will probably show a sharp deterioration in business sentiment both at manufacturers and non-manufacturers. Other key data for the country include consumer confidence, retail sales, unemployment rate, industrial production and housing starts. In South Korea, investors will be waiting for business confidence, industrial production, retail sales, trade balance, inflation rate and Markit Manufacturing PMI.

Australia’s Ai Group will be publishing its manufacturing and construction indexes. Updated numbers for trade balance, retail sales, private sector credit and building permits will also be in the spotlight.

Other highlights for the Asia-Pacific region include India Markit PMIs, Indonesia and Thailand inflation rates and business confidence indicators, Taiwan consumer confidence, Hong Kong and Malaysia trade figures, and New Zealand ANZ business confidence and building permits.