Upcoming events:
- MondaySummary of the views of the Bank of Japan and the German IFO.
- Tuesday: Canadian Consumer Price Index, US Consumer Confidence.
- Wednesday: Australia's monthly consumer price index.
- Thursday: Japanese Retail Sales, US Durable Goods Orders, US Final Q1 GDP, US Unemployment Claims.
- Friday: Tokyo CPI, UK Final Q1 GDP, Canada GDP, US Personal Consumption Expenditures, University of Michigan Consumer Confidence (final).
Tuesday
Canadian CPI YoY is expected to come in at 2.6% vs. 2.7% previously, while M/M is expected at 0.3% vs. 0.5% previously. The average CPI on an annual basis is expected to be 2.8% versus 2.9% previously, while the average Consumer Price Index (CPI) on an annual basis is expected to be 2.6% versus 2.6% previously.
The latest report showed Core inflation measures fell within the Bank of Canada's 1-3% target range. Which gave the central bank the green light to make the first interest rate cut. The market sees a 67% chance of interest rates being cut again in July but that will depend on this week's CPI data.
Inflation measures in Canada
The US Consumer Confidence Index is expected to come in at 100, compared to 102 previously. The latest report showed improved confidence after three consecutive months of decline. The Conference Board's senior economists stressed that ” Strong job market Continued to enhance consumers' comprehensive assessment of the current situation.
Moreover, “looking ahead, fewer consumers expected a deterioration in future working conditions, job availability, and income.” Overall trust measure It has remained within the relatively narrow range in which it has been hovering for more than two years. The current situation indicator will be something to watch given the recent failures in US unemployment claims as this is generally an indicator Leading indicator
Regarding the unemployment rate.
American consumer confidence
Wednesday
Australian monthly CPI is expected to be 3.8% year-on-year versus 3.6% previously. As a reminder, the latest report surprised to the upside with core inflation measures remaining steady at higher levels. The Reserve Bank of Australia maintained a hawkish stance at its latest policy meeting as it reiterated that “inflation remains above target and is proving to be sustainable” and added that “inflation is falling but has been slower than previously expected.”
For this reason, the central bank kept all options on the table by “not ruling anything out either at home or abroad.” Some better inflation data won't change much for the market, but another disappointment could add some slight interest rate hike opportunities. The RBA is expected to remain on hold until mid-2025.
Australia monthly consumer price index year on year
Thursday
US unemployment claims remain one of the most important releases to follow each week as they are a convenient indicator of the state of the labor market. Initial claims continue to hover around the cycle lows, while continuing claims remain steady around the 1800K level.
This has led to a weaker and weaker market reaction as participants become accustomed to these numbers. However, In the last two weeks we have started to see data falling short of expectations Although it remains below the cycle highs. This is something to keep an eye on.
Initial claims this week are expected to reach 236K vs. 238K previously, while continuing claims are expected to reach 1820K vs. 1828K previously.
US unemployment claims
Friday
YoY core CPI in Tokyo is expected to come in at 2.0% versus 1.9% previously. Japan's inflation rate is basically on target and there are no strong signs of a return to acceleration. It is difficult to see a rate hike given that Japan has strived to achieve inflation for decades, and could destroy that achievement by tightening policy. The data should not change anything for the Bank of Japan, which is expected to reduce its bond purchases by a “significant” amount at the next policy meeting.
Tokoy Core-Core CPI on an annual basis
The headline US PCE index is expected to come in at 2.6% y/y vs. 2.7% previously, while the month/month index is expected at 0.0% vs. 0.3% previously. The core PCE index is expected to come in at 2.6% y/y vs. 2.8% previously, while the monthly reading is expected at 0.1% vs. 0.2% previously. Forecasters can reliably estimate PCE as soon as the CPI and PPI are released, so the market already knows what to expect. This report won't change anything for the Fed The central bank remains in a “wait and see” mode until at least September.
Core personal consumption expenditures in the United States on an annual basis