We’re in for a busy week as we try to price in the Fed, ECB, and BOJ’s monetary policy decisions!
Meanwhile, data releases from China could affect intraweek trends for AUD, NZD, and even JPY.
And now for the closely-watched economic indicators on the economic calendar this week:
U.S. inflation reports
Before the Fed publishes its June policy decision, its members will have a look at Uncle Sam’s inflation numbers on June 13 (Tuesday) at 12:30 pm GMT.
Thanks to demand destruction and lower gasoline prices, markets see consumer prices easing from 0.4% to 0.3% m/m in May. This may take the annualized rates to about 4.1% from 4.9% and the core inflation rate from 5.5% to 5.2% territory.
Word around is that a monthly reading of 0.4% or higher would up the odds of a Fed rate hike on Wednesday and likely cause increased uncertainty for the dollar’s intraweek trends.
FOMC statement and projections
After hinting about it for weeks and unless the U.S. CPI widely beats estimates, Fed members will likely adopt a “hawkish skip” and keep its interest rates steady on June 14 (Wednesday) at 6:00 pm GMT. Of course, the FOMC gang will do their best to discourage markets from getting “time for rate cuts!” vibes from the event.
They may use the new dot plot and economic projections, or FOMC Chairman Powell may straight up tell us in his 6:30 pm presser that they’re open to further increases in the next months.
Take note that a not insignificant number of market players still see a rate hike this week, so USD’s volatility will likely be extra elevated depending on how close the debate was among members or how far most of them see the first interest rate hike is.
China’s Data dump
On June 15 (Thursday) at 2:00 am GMT, the world’s second-largest economy will publish its May industrial production, retail sales, fixed asset investment, and unemployment rate numbers.
Keep in mind recent business activity numbers showed signs of underwhelming growth after the lockdowns have been lifted.
If we see weaker-than-expected Chinese data releases this week, then “risky” bets like AUD, NZD, GBP, bitcoin, and even crude oil prices could take hits.
ECB’s monetary policy decision
European Central Bank (ECB) members are expected to act on ECB President Lagarde’s “there’s no evidence that underlying inflation has peaked” remarks and raise their interest rates by 25 basis points to 4.00%.
As in the last ECB events, it would be hard for the markets not to consider this as one of ECB’s last hikes in this rate hike cycle. Lagarde would probably try for hawkishness anyway, likely by saying that they’re keeping the door open for more hikes when she conducts her presser at 12:45 pm GMT.
Keep an eye out for clues on what markers ECB members are looking at to get clues on when they’ll likely change their hawkish biases!
BOJ’s monetary policy decision
Last but not least in our central bank parade is the Bank of Japan (BOJ), which is expected to keep its monetary policies unchanged in June.
We’re seeing signs that BOJ members are getting uncomfortable with JPY’s low levels, though, so we may see some jawboning in the official statement.
Talks about monetary policy tools that they’re looking at (ex: yield curve targets) could also move JPY around so make sure you keep close tabs on the event!