Deutsche – The week ahead…FXWW

From the FXWW Chatroom – While it’s a fairly quiet week ahead for data next week, the US CPI report for June should be of particular interest, while the start of Q2 US bank earnings, a NATO summit and President Trump travelling to the UK to meet PM May should be enough to keep markets busy. With US tariffs on Chinese goods starting today, expect markets to also be on edge for signs of further escalation in the trade war.

Starting with the data, the June CPI report in the US on Thursday is likely to garner most interest next week. The Powell-led Fed is clearly growing more conformable with inflation rising back to the Fed’s target, which has played out in the recent data with both the core PCE and core CPI data at and above 2%, however the market will still be on the lookout for signs that inflation is now sustainably holding at this level. The consensus for the core reading on Thursday is for yet another +0.2% mom reading – the 33rd month in a row that we’ve had such a consensus (of which 18 have proven to be correct). The annual rate is also expected to rise one-tenth to +2.3% yoy which would be the highest since January 2017. Headline CPI is expected to come in at +0.2% mom and +2.9% yoy.

Away from that, the June PPI report on Wednesday will be another inflation report worth watching in the US. It’s mainly second tier releases away from that though with May consumer credit on Monday, June NFIB small business optimism and May JOLTS on Tuesday, May wholesale inventories on Wednesday, and finally the June import price index and preliminary July University of Michigan consumer sentiment report on Friday rounding out the diary.

In Europe it’s a fairly sparse diary for data releases next week. The final June CPI revisions are due to be made on Thursday in Germany and France while on the same day it’ll be worth watching the May industrial production report for the Euro area for signs of any improvement in the hard data (which has been unusually soft of late compared to the PMIs). The July ZEW survey in Germany is due on Tuesday while May trade data is out early on Monday.

Meanwhile in Asia there are a few prints of note in China next week. Early on Tuesday we’ll get the June CPI and PPI prints. Consensus for the former is a one-tenth increase to +1.9% yoy while the latter is expected to increase three-tenths to +4.4% yoy. On Friday the June trade numbers should be closely watched in light of all the trade war talk. Finally money supply and credit data for June should also be out at some stage next week.

Away from the data, there is some central bank speak to keep an eye on next week. Over at the Fed, New York Fed President John Williams is due to speak to business and community leaders on Wednesday evening. On Thursday Minneapolis Fed President Neel Kashkari (dove/non-voter) speaks in Minnesota on a panel discussing immigration issues, then later in the day Philadelphia Fed President Patrick Harker (neutral/non-voter) speaks at an economic summit in Idaho. On Friday Atlanta Fed President Bostic (neutral/voter) then holds a town hall chat in Virginia. Over at the ECB, President Draghi is due to speak to the European Parliament’s Committee on Economic and Monetary Affairs in Brussels on Monday, while board member Benoit Coeure is due to speak on Sunday and Nowotny will speak on Monday. The BoE’s Broadbent is also due to speak at a conference on Monday morning, while Governor Carney is scheduled to speak on Wednesday afternoon in Boston.

The Fed will get a bit of focus next week too with the Fed’s semi-annual Monetary Policy Report to Congress due out on Friday afternoon. It’s worth noting however that Fed Chair Powell won’t testify until the following week.

Elsewhere, as mentioned at the top, US bank earnings on Friday should also be under the spotlight. Wells Fargo, JP Morgan and Citigroup will all report their Q2 earnings. Prior to that there is only a small smattering of other earnings releases including PepsiCo on Tuesday and Delta Airlines on Wednesday.

As for politics, President Trump has a busy week next week, starting with his participation at the NATO summit on Wednesday and Thursday, before travelling to the UK to meet PM May on Friday. Finally, other things worth watching next week include US Secretary of State Mike Pompeo leaving North Korea tomorrow following a meeting with Kim Jong Un, German Chancellor Merkel and China PM Li Keqiang chairing a meeting of cabinet ministers from both countries on trade on Monday, Pompeo participating at the US-EU Energy Council on Tuesday, Japan PM Abe meeting European Council President Tusk and EC President Juncker on Wednesday, and Euro Area finance ministers meeting in Brussels on Thursday to discuss the EMU.

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