Investors will continue to monitor the spread and impact of the pandemic on the global economy amid growing concerns that a second wave of infections in the US could lead to additional lockdown measures.
Elsewhere, US Fed Powell’s testimony to Congress and an European Council meeting will be keenly watched. Data to follow include US and China retail trade and industrial output; UK jobs report, retail sales and inflation data; Germany investor morale; Japan trade and inflation; and Australia employment figures. Monetary policy action will be taken by central banks in the UK, Japan, Brazil, Russia, Switzerland, Indonesia and Taiwan, while minutes from prior meetings will be published in Japan and Australia.
In the US, Federal Reserve Chairman Jerome Powell will testify on the semiannual monetary policy report to Congress, the first since the pandemic took hold. Meanwhile, retail sales and industrial production numbers for May should point to a recovery in trade and activity from the previous month’s record falls as the country gradually reopened its economy. Also, housing data is expected to point to a rebound in housing starts and building permits from April’s five-year lows. Other important publications are business inventories, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, first-quarter current account, overall capital flows, the government’s monthly budget statement and the weekly jobless report.
Elsewhere in America, central banks in Brazil and Chile will be deciding on monetary policy, with Brazilian policymakers seen cutting rates to fresh record lows aiming to support a weakening real amid the coronavirus crisis. Other key reports to follow include Canada retail trade, inflation data, manufacturing and wholesale sales, and new housing price index; Mexico first-quarter private spending; Brazil retail sales; and Peru monthly GDP.
Across the Atlantic, the Bank of England will be holding its monetary policy meeting on Thursday, with markets expecting no changes in borrowing costs and an increase of about £100 billion in its bond buying program. Traders will also await to see whether the central bank opens the door to negative interest rates. On the economic data front, the UK jobs report is expected to show the highest unemployment rate in three years and the weakest wage growth in nearly six years. Figures for retail trade, inflation data and public sector net borrowing will also be in the spotlight.
Elsewhere in Europe, all eyes will be on the European Council meeting on the 18th and 19th at which EU leaders are expected to discuss the €750 billion Recovery Fund Plan to support the countries and sectors hit hardest by the pandemic. On the economic data front, investors will turn their attention to the Eurozone foreign trade, construction output, wage growth and current account; Germany investor morale, producer and wholesale prices; Italy trade balance and factory orders; Switzerland foreign trade and producer and import prices. Also, policymakers in Switzerland, Norway, Poland will probably hold interest rates at current levels, while Russia’s central bank is seen cutting them by at least 50 bps.
China will be publishing industrial production, retail sales, fixed asset investment, unemployment rate and house price index. Output growth is set to accelerate in May, while both trade and investment are seen contracting at slower rates. The Bank of Japan will be deciding on monetary policy, but no changes are expected, while minutes from an unscheduled policy meeting in May will also be highly anticipated. The country will be publishing trade balance and consumer inflation rate.
The Reserve Bank of Australia will be also releasing the minutes of its last monetary policy meeting. On the economic data front, important releases include employment figures, Westpac leading index and house price index. Across the Tasman Sea, New Zealand first-quarter GDP figures will be in the spotlight, while investors in India will focus on trade balance and wholesale prices, with markets pointing to the first month of deflation since June 2016.
Other highlights for the Asia-Pacific region include: Singapore non-oil exports; Malaysia and Hong Kong unemployment rates; and Indonesia trade balance, retail sales and business confidence. Central banks in Taiwan and Indonesia will be deciding on monetary policy.