The Weak Ahead: June 13 - 17; Four Major Banks Have Their Policy Meetings

This week is extremely busy with many policy meetings from major banks! Federal Reserve, Bank of England, Bank of Japan and Swiss National Bank have their interest rate decisions while numerous market affecting indicators are also scheduled for release. UK and Australia will release their job reports while U.S., UK, Eurozone and Canada’s inflation reports are some of the various significant news coming out.

A quiet day on Monday with limited news scheduled for release. In UK, the CB leading economic index for May will be released. Later in the day, the Australian consumer inflation expectation for June will be closely watched. Moreover, the National Australia Bank’s business conditions for May will be released. Very early on Tuesday morning, the Japanese industrial production for April is expected to rise slightly by 0.1% to 0.4% compared to the month before.

On Tuesday morning, the market attention turns to UK, where inflation rate and numerous other indicators will be released. The consumer prices are forecasted to have risen 0.4% yoy in May versus an increase of 0.3% before. Compared to the month before, an increase of 0.2% is expected (0.3% expected vs 0.1% before), though it will not attract much attention as the market participants are concentrated on Brexit polls. The core inflation rate, producer price index, retail price index are also coming out.

In Eurozone, the industrial production for April is forecasted to reveal a significant increase of 1.3% yoy versus 0.2% in March. The employment change for the first quarter will be released as well – no forecasts are available yet. Going to U.S., the NFIB business optimism index for May is coming out along with the retail sales report. The retail sales are expected to rise just by 0.3% in May much lower than last month’s increase of 1.3%. It worth to mention that retail sales is the most eyed indicator coming out before the FOMC meeting on Wednesday and after the disappointing non-farm payrolls report.

Meanwhile, the export and import price indexes for May are scheduled for release as well as the business inventories for April. Overnight, New Zealand’s current account for the first quarter and later a press conference from Bank of Japan will be eyed.

On Wednesday, Federal Reserve and Bank of Japan policy meetings are the key events of the really busy day, in terms of economic releases. We start the day with the UK jobs report. The ILO unemployment rate for the three months to April is expected to remain unchanged for one more quarter at 5.1% while no forecasts are available for the claimant count change until now. The wages are forecasted to rise by 1.7% in April, slightly below March’s 2% growth. 

A while later, Eurozone’s trade balance for April will be released. In U.S. the producer price index, the industrial production and the capacity utilization, all for May are coming out before the awaited policy meeting.

At 18:00 GMT time all the traders will remain tuned to learn Fed interest rate decision. Following the weak jobs report, the market participants reformed their expectations for an interest rate rise in June from the current 0.5%. If Fed doesn’t raise its main interest rate the FOMC statement will be scrutinized for hints when the next rate hike will be, however, I would expect very careful statements from Fed regarding the timing and is very likely Fed Yellen to avoid commenting on that after she took back the rate hike “in the coming months” following the soft jobs report. The Fed will also review its economic projections for the next twelve months.

In New Zealand, the Fonterra dairy auction will take place followed by the final GDP growth for the first quarter.  Later in the second half of the day, the BoC Governor Stephen Poloz will have a press conference. Overnight, Australia will publish its jobs report. The unemployment rate will remain stable at May, though the employment change is expected to increase 15.0K in May versus 10.8K the last month.

A while later, the Bank of Japan has its interest rate decision – no changes are expected – and will publish its monetary policy statement and thereafter, early on Thursday, a press conference will follow.

On Thursday at 7:30 GMT time the Swiss National Bank also has its interest rate decision followed by a press conference of SNB Chairman Thomas Jordan and the market affecting news do not stop here. The UK retail sales are expected to show a marginal increase of 0.3% mom in May versus 1.3% the month before. Eurozone’s inflation rate in May is scheduled for release after, and it’s predicted to remain in the negative territory at -0.1% for the second consecutive month. The 19-nation union is in deflation since February with only exception a flat month in March. A Eurogroup meeting is scheduled to take place.

Afterwards, the Bank of England monetary policy committee will vote on the interest rates. I wouldn’t expect any changes to the voting pattern one week ahead of the historical EU referendum. Thus, the benchmark interest rate will remain on hold at 0.50% and the QE program at £375 billion. 

We continue the super busy Thursday with the U.S. inflation rate which is predicted to have remained unchanged at 1.1% yoy for May. The Philadelphia Fed manufacturing survey and the NAHB housing market index both for June will be released.

On Friday, Eurozone EcoFin policy meeting will take place. The current account for April and the labour cost for the first quarter will be released. In U.S., the housing starts and the building permits for May are coming out. Going to Canada, the inflation rate is scheduled for release a while later the U.S. Michigan consumer sentiment index for June is coming out. The ECB President Mario Draghi will speak at 15:00 GMT time in Munich, Germany but is not expected to say much data for the economy.