The Week Ahead – China GDP and Production Numbers to Set the Tone

On the Macro

It’s a quieter week ahead on the economic calendar. However, there are several market-moving economic indicators for investors to react to, including GDP numbers from China and retail sales figures for the UK and the US.

For the Dollar:

We expect the markets to turn their attention from the Fed to the US economy. With recent inflation numbers writing off the bets on a September interest rate hike, NY Empire State Manufacturing numbers kickstart the week.

However, retail sales figures will be the main report of the week on Tuesday. A slide in consumer spending could reignite fears of a US economic recession.

Jobless claims and the Philly Fed Manufacturing Index will also move the dial on Thursday. We expect increased sensitivity to deteriorating labor market conditions.

Other stats include industrial production and housing sector numbers that should not impact the dollar.

No FOMC members are speaking this week, with the Fed entering the blackout period on July 15.

For the EUR:

It’s a quiet week for the EUR. Finalized Italian (Mon) and Eurozone (Wed) inflation numbers for June will draw interest. However, the finalized numbers would need to be hotter to move the dial.

On Thursday, German producer price index numbers will impact buyer appetite. A more marked decline in the German PPI would raise fears of a deeper economic recession.

With the economic calendar on the light side, investors should monitor ECB chatter. ECB President Christine Lagarde and Chief Economist Philip Lane are on the calendar to speak on Monday.

For the Pound:

It is a busy week ahead for the Pound. Inflation numbers for June will have a material impact on the Pound and market sentiment toward BoE monetary policy. Sticky inflation would support bets on the Bank pushing rates beyond the summer break.

On Friday, retail sales figures will also need consideration. A pickup in spending would support more hawkish bets on the BoE.

With the economic calendar on the busy side, investors should also consider BoE chatter. MPC Member Dave Ramsden is on the calendar to speak on Wednesday.

For the Loonie:

It is a busy week ahead on the economic calendar for the Loonie. Inflation figures for June will be in focus on Tuesday. After the BoC policy decision, a pickup in inflationary pressure would signal the need for more from the Bank of Canada.

On Friday, retail sales numbers will also move the dial.

Other stats include housing sector, wholesale sales, RMPI, and manufacturing sales numbers that the investors will likely brush aside.

Out of Asia

For the Aussie Dollar:

It is a quiet week for the Aussie Dollar. The RBA monetary policy meeting minutes will garner interest on Tuesday, with the markets betting on the RBA hitting the brakes.

However, we expect the RBA to remain data dependent, placing a greater emphasis on the employment numbers out on Thursday. A steady unemployment rate would leave consumption and inflation to guide RBA monetary policy expectations.

For the Kiwi Dollar:

It’s a big week for the Kiwi Dollar, with Q2 inflation numbers out on Wednesday. Last week, the RBNZ signaled a possible end to the monetary policy tightening cycle. A pickup in inflationary pressure would force the RBNZ to return to the drawing board.

For the Japanese Yen:

It is a busy week for the Japanese Yen. However, investors must wait until Thursday for meaningful stats that could force the Bank of Japan to move on from ultra-loose.

Trade data for June will draw interest ahead of inflation figures on Friday.

Out of China

It is a bust week ahead. Q2 GDP, industrial production, fixed asset investment, and retail sales will be in focus on Monday.

While the markets are banking on stimulus from Beijing, weak GDP, industrial production, and retail sales would weigh on the commodity currencies and riskier assets.

On Thursday, the People’s Bank of China will also set the 1-year and 5-year loan prime rates.