Upcoming events:
- Tuesday: Canada CPI.
- Thursday: US Unemployment Claims.
- Friday: EZ CPI, US Core PCE.
Tuesday: Canadian Headline CPI is expected on an annual basis at 4.2% vs. 4.4% prior, while the M/M reading is seen at 0.5% vs. 0.7% prior. Core CPI is expected YoY at 3.9% vs. 4.1% with no forecast for the M/M number for now, although the previous figure was 0.5%. The Bank of Canada was surprised by the rate hike at the last meeting as they were not happy with the inflation in the first quarter and the general data trends. Higher or higher data may prompt the BoC to another hike.
BoC
Thursday: US Unemployment Claims remains a major data point and market mover each week as the market and the Federal Reserve focus specifically on the labor market. Initial claims have been missing expectations for a few weeks now, but continued claims are improving week by week. For this week, Initial Claims are expected at 264K vs. 264K prior, while Continued Claims are expected at 1767K vs. 1759K prior.
Continuing US claims
Friday: Eurozone headline CPI is expected YoY at 5.7% vs. 6.1% previously, while there is no forecast for the average/monthly number yet, although the previous figure was 0.0%. Core CPI is seen on an annualized basis at 5.5% vs. 5.3% prior and there is no forecast for the M/M reading, although the prior figure was 0.2%. There is also the Unemployment Rate which was announced and expected at 6.5% unchanged. The ECB has made it clear that a rally in July is basically guaranteed unless there is a fundamental change in the data, while a September rally is more moot and will depend on the data.
Core inflation rate in the euro area on an annual basis
Core PCE on an annual basis in the US is expected at 4.7% vs. 4.7% prior, while M/M is expected at 0.4% vs. 0.4% prior. This data is generally less market moving than the more timely CPI report and should not change much of the markets’ outlook given that we will get the NFP and CPI report before the next FOMC meeting. So, unless there is a significant deviation from the forecast, this shouldn’t be much of a problem.
US Core PCE annually