Week Ahead – June 12th

It will be a busy week in the US, with the Fed interest rate decision, inflation rate, retail sales, and Michigan consumer sentiment taking the central stage. Investors will closely follow the European Central Bank and Bank of Japan monetary policy meetings. Additionally, China will be releasing industrial production, retail sales, and fixed asset investment data, while India will announce its inflation rate and industrial production figures. Other important releases include Germany’s ZEW Business Confidence, UK’s trade balance and GDP for April, and Australia’s consumer and business confidence as well as jobless rate.

In the United States it will be a very eventful week, with a central focus on the Federal Reserve’s announcement on June 14th and updated economic projections from the FOMC. The market is currently pricing in a 77% chance that the Fed would maintain its interest rates at the current levels but the inflation rate release a day before may change those projections. The US inflation rate is forecasted to fall to 4.1% in May from 4.9% in April while core gauge may decelerate to 5.2% from 5.5%. On the other hand, the retail sales is expected to fall by 0.1%. The other important reports cover producer and foreign trade prices, industrial production, the preliminary estimate of Michigan Consumer Sentiment, overall capital flows, business inventories, and the government’s monthly budget numbers for May. Regional activity indexes such as the Philadelphia Fed Manufacturing Index and NY Empire State Manufacturing Index will also be under the spotlight. Outside of the United States, key data to watch include Canada’s housing starts and Brazil’s business morale and retail trade figures.

In Europe, the ECB is expected to raise rates by 25 basis points, and markets will look out for future rate adjustment indications, having learned the Eurozone economy slipped into recession. Furthermore, consumer price inflation is anticipated to be revised upwards to 0.3% month-over-month in May. In Germany, the ZEW Indicator of Economic Sentiment is projected to decline for the fourth consecutive period, reaching a six-month low. In the United Kingdom, monthly GDP figures are likely to confirm a rebound in April, while the jobless rate is set to increase to 4% and average regular pay growth to reach 6.9%. Also, are worth noting inflation updates from Germany, France, and Italy, as well as other crucial numbers such as the Euro Area’s wage growth, the balance of trade, and industrial activity; Germany’s wholesale prices; Turkey’s unemployment rate; and Spain and Italy’s foreign trade.

In China, all eyes will be on industrial production, fixed investment, retail sales, and labor data for May for further insights on the progress in the country’s underwhelming economic recovery. Meanwhile, the Bank of Japan is expected to hold its dovish policy stance, although investors will be watchful for signals of a potential pivot down the line. Japan will also release May’s trade balance. In India, retail inflation is set to remain well below the RBI’s upper target of 6%. Additionally, traders will await May’s trade balance and April’s industrial production. Elsewhere, South Korea and the Philippines will divulge labor data.

In Australia, key releases will be headlined by Westpac Consumer Confidence for June and NAB Business Confidence for May. Apart from that, investors will assess a batch of labor data for May and inflation expectations for June for insights on the RBA’s policy outlook following its latest surprise hike.