The week will be dominated by inflation data releases for many countries. These data are crucial in the context of monetary policy decisions by central banks, which have begun to look again at easing monetary policy. In addition to inflation data, there will be a number of US publications awaiting the Fed`s decision on interest rates at the end of July.
Already on Monday at 10:00 the consumer inflation in Poland will be published, which according to preliminary estimates was to be 2.6 percent in June. If this data is confirmed, it will be the highest level of inflation in Poland since 2012. Nevertheless, it probably will not affect the decision of the Monetary Policy Council. On Tuesday, at 00:45 data on inflation from New Zealand will be released, on Wednesday at 10:30 there will be inflation data from Great Britain, and at 11:00 from the euro zone. Also on Wednesday at 14:30 inflation in Canada will be published, and on Friday at 1:30 in Japan.
It is worth paying attention to publications from Great Britain due to the divergence in the statements of the Bank of England representatives about the interest rate increase and market expectations, which assumes the possibility of cutting rates by the end of the year. The markets are considering the possibility of a rate cut in the United Kingdom by the end of the year. During the week, the number of data from the UK will probably give arguments to one and the other party. The increase in wages is likely to accelerate to the highest level after the crisis to 3.5 percent. However, with a low level of consumer confidence, it seems that consumers are holding back purchases and wage increases do not help.
We will also have several Fed members speeches and the market will expect further confirmation of interest rate cuts already in July. In addition, retail sales and industrial production will be the focus of attention. Consumer confidence in the US remains unchanged due to rising asset prices and falling gasoline prices, while real household disposable income grows strongly due to higher employment and faster wage growth than inflation. This may favor positive data readings from the United States.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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