Overnight the Chinese Data was weaker than expected, despite stronger retail sales in May, industrial output and fixed-asset investment both posted slower growth, and home prices softened further. This has created a 'Risk Off' attitude with the Nikkei -1.8% and the CSI -0.2%. So, what lies in store for the rest of the week?
Our first thoughts are domestic, the BoE holds the latest policy setting meeting on Thursday, and the hopes of a pre-July 4 election rate cut will disappear. Markets now expect easing later rather than sooner, with a 40% chance of an August quarter point move and a 70% chance in September - sticky inflation the reason for the delay. This leads us on nicely to the May inflation data which is released Wednesday, this is expected to remain above 3% whereas a '2' handle would be preferred.
Other central banks that meet this week include the RBA, Tuesday, and the Norges Bank and SNB on Thursday. Of these, the SNB is the most interesting. They cut in March, and another cut is seen as 50-50 after steady March inflation data.
In the US, we get retail sales that are expected to have risen 0.3% after they were unexpectedly flat, and we hear from several Fed speakers during the week, including New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, San Francisco Fed head Mary Daly and Richmond Fed head Thomas Barkin.
As for today, unusually EURUSD volatility has picked up. This is due to polling over the weekend which puts Macron’s Renaissance Party firmly in third place behind Le Pen and Melenchon. We are firmly below the 200 day moving average at 1.0790 and 1.0600 is the key support.
Data ise we have Italian CPI, US Empire manufacturing and speeches from the ECB Chief Economist Phillip Lane and Philadelphia Fed President Patrick Harker.
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