- ECB Policy Meeting
The latest ECB monetary policy meeting will be held on Thursday July 20th at 07.45 ET.
President Draghi will hold his regular press conference at 08.30 ET.
All ECB meetings will be important over the next few months as the central bank looks to plot its way out of the ultra-loose monetary policies pursued over the last two years.
There is only a very low probability of any change in interest rates at this meeting with the main focus on any changes in forward guidance.
Growth has continued to strengthen within the Eurozone, which will underpin confidence within the central bank.
The ECB members, however, appear to be dominated by fear over the reaction to even a small shift in policy, which will maintain an underlying tone of caution in rhetoric.
There is the potential for a limited shift in guidance with the dropping of an easing bias surrounding quantitative easing.
Bank President Draghi may also indicate that there will be a major review at the September meeting.
The latest ECB source reports suggested that the central bank will announce a plan to taper bond purchases at the September meeting, but is wary over signaling a specific end time for the programme.
- UK CPI Inflation data
The UK CPI inflation data will be released on Tuesday July 18th at 04.30 ET.
Inflation data will have a significant short-term impact on markets and will also have an important impact on expectations surrounding the August Bank of England policy meeting.
There has been further upward pressure on prices from Sterling weakness seen over the past few months.
Some members on the Monetary Policy Committee are more concerned over the inflation outlook and will push for higher interest rates at the August meeting.
Other members are still uneasy surrounding demand trends and expect inflation gains to be temporary.
Any increase in the headline inflation rate to above 3.0% would increase pressure for the Bank of England to raise interest rates.
The latest producer prices data will be released at the same time and will give insight into forthcoming pressures. The latest retail sales report will also be released on Thursday July 20th with the government borrowing data due for release on Friday July 21st.
- Bank of Japan policy meeting
The Bank of Japan will announce its monetary policy decision on Thursday July 20th local time (around 23.00 ET Wednesday).
Although a policy change can’t be ruled out, there is a strong probability that the current framework will be left unchanged at the latest meeting.
The main focus will be on the bank’s assessment of growth and inflation prospects.
Markets will also be focusing on an eventual exit strategy from the very expansionary monetary policy and current yield-control policy.
Speculation over a relatively near-term shift away from an aggressive policy will tend to increase if there is only a relatively lackluster defense of the current policy. A more determined defense of the current policy would tend to increase expectations that any policy tightening will be resisted for longer.
- US Housing starts
The latest US housing starts and building permits data will be released on Wednesday July 19th at 08.30 ET.
The US construction data has been generally disappointing over the past few months with the last three releases on housing starts weaker than consensus forecasts and lackluster data on building permits.
The generally disappointing data has had a significant impact in dampening confidence in the overall economic outlook, although much of the weakness appears to stem from supply issues such as land shortages and labor shortages rather than weakness in demand.
In this context, the data will provide important insights into underlying US economic conditions. Overall confidence will improve if there is a more solid reading for the June data.
The New York Empire and Philly Fed manufacturing surveys will be released on Monday and Thursday respectively.
- New Zealand CPI
The latest CPI data will be released on Tuesday July 18th local time (18.45 ET Monday).
New Zealand inflation data is only released on a quarterly basis, increasing its impact on monetary policy expectations.
Data for the previous quarter put inflation back within the central bank’s target range.
Weakness in energy prices is liable to dampen the headline data, although the core data is likely to be a key underlying focus within the data.
Evidence of increased underlying inflation would increase pressure on the Reserve Bank of New Zealand (RBNZ) to tighten policy, especially as the Bank of Canada has already shifted to a tighter policy with a move to increase interest rates at the July policy meeting.
A more hawkish policy tone amongst global central banks would also increase pressure on the RBNZ to tighten policy. A low inflation print would give the RBNZ more room for man oeuvre and curb speculation over higher interest rates.
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