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US Open Preview – European equities and greenback lose ground; German inflation coming up
July 30, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: German inflation coming up; US pending home sales also due; Bank of Japan in focus
Important releases as the day unfolds will be the advance estimates of German inflation for July. Meanwhile, pending home sales data out of the US will attract some interest, while Tuesday’s Asian calendar will be a busy one, featuring among others the much-awaited outcome of the Bank of Japan’s latest policy meeting.
July’s preliminary inflation data out of Germany, the eurozone’s largest economy, are due at 1200 GMT. Inflationary pressures as gauged by the consumer price index (CPI) are anticipated to grow by 0.4% m/m, reflecting an acceleration compared to June’s 0.1%. In yearly terms, CPI is forecast to expand by 2.1% y/y, the same pace as in June. The Harmonised Index of Consumer Prices (HICP), that uses a common methodology across EU countries, will also be generating interest.
It is of note that the abovementioned figures are coming one day ahead of the eurozone’s corresponding numbers and may thus be seen as giving an indication as far as tomorrow’s release is concerned; in other words, euro pairs may prove sensitive to the German prints. Meanwhile, flash Q2 GDP growth numbers for the eurozone, as well as June’s unemployment rate, will be released alongside euro area inflation readings on Tuesday at 0900 GMT.
Out of the US, pending home sales are slated for release at 1400 GMT; sales are expected to increase by 0.1% m/m in June, after declining by 0.5% in May.
US Secretary of State Mike Pompeo, Commerce Secretary Wilbur Ross and Energy Secretary Rick Perry will be speaking at the Indo-Pacific Business Forum at 1230 GMT. In the meantime, President Trump is scheduled to meet Italian PM Guiseppe Conte at the White House.
Tuesday’s Asian session will be rather packed, including household spending numbers, industrial production figures, as well as data on employment (and unemployment) out of Japan. China will be on the receiving end of readings on manufacturing and services PMI, while business confidence and building approval prints are due out of New Zealand and Australia respectively.
However, the Bank of Japan’s meeting on monetary policy, which is to be concluded tomorrow, is attracting the lion’s share of attention out of Asia. Since around mid-July, the yen has benefitted on the back of growing speculation that the Japanese central bank will adjust its monetary policy framework in a manner that is supportive of a stronger yen. Should this indeed materialize, then the currency is likely to post further gains. It should be kept in mind though, that economic releases that include subdued inflation and weak household spending, are not lending credence to a hawkish tilt by the BoJ. Should the Bank not deliver to the somewhat “hawkish positioning” by markets, then the yen may be in for a sharp sell-off.
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