Currency markets are anticipating the conclusion of the BOJ meeting on Tuesday. No changes are expected to the current policy scheme and asset purchase targets, but it is likely that the committee will introduce measures to try to stem JGB volatility. Based on their recent record, it is unlikely they will succeed. Later in the week, the focal point will shift to the US where the monthly Treasury statement on Wednesday and retail sales data on Thursday will shed more light on how automatic federal spending cuts are affecting the broader economy.
Monday 10th June
- Japan Current Account Balance: GS : +¥118.5B, Previous +¥342.4B
- Czech Republic Consumer Price Index (May): GS +1.5% yoy, Consensus +1.6%, Previous +1.7%
- Also interesting: France Industrial Production, Sweden Industrial Production, Italy Industrial Production, Japan GDP revision
Tuesday 11th June
- Japan MPC Meeting: GS expects no change to the current policy scheme and APP targets, and sees a strong likelihood the MPC will extend fund-supplying operations to stabilize JGB volatility
- Hungary Consumer Price Index (May): GS +2.0% yoy, Consensus +1.9% yoy, Previous +1.7%
- Russia Trade Balance (Apr): Consensus +$14.3B, Previous +$16.1B
- Israel Trade Balance (May): Previous -$1264M
- Turkey Current Account Balance (Apr): Previous -$5.4B
- UK Industrial Production (Apr): GS -0.1% mom, Previous +0.7%
- UK Manufacturing Production (Apr): GS -0.2% mom, Previous +1.1%
- US NFIB Small Business Optimism Index (May): Consensus 91.5, Previous 92.1
- US Wholesale Inventories (Apr): Consensus +0.2% mom, Previous +0.4%
- Also interesting: Philippines Exports, Mexico Industrial Production, US JOLTS Job Openings
Wednesday 12th June
- India Industrial Production (Apr): GS +4.0% yoy, Consensus +2.1%, Previous +2.5%
- Germany Harmonised CPI (May): Flash +1.7% yoy
- France Harmonised CPI (May): Previous +0.8% yoy
- Spain Harmonised CPI (May): Flash 1.8% yoy
- Italy Harmonised CPI (May): Flash 1.3% yoy
- UK ILO Unemployment Rate (Apr): GS 7.8%, Previous 7.8%
- UK Employment (Apr): GS -14K (3m/3m), Previous -43K
- Euro Area Industrial Production (Apr): Previous +1.0% mom
- US Monthly Treasury Statement (May): Consensus -$110.0B, Previous +$112.9bn
Thursday 13th June
- Korea MPC: Policy rate expected to be left unchanged at 2.5%
- Indonesia MPC: Expectations are for the policy rate to be left at 5.75%.
Philippines MPC: Consensus expects the policy reverse repo rate to be left at 3.5% and policy repo rate at 5.5%.
- Israel Current Account Balance (1Q): Previous: +$71M
- US Retail Sales (May): GS +0.5% mom, Consensus +0.4%, Previous +0.1%
- US Retail Sales ex-autos (May): GS +0.3% mom, Consensus +0.3%, Previous -0.2%
- US Business Inventories (Apr): Consensus: +0.3% mom, Previous 0.0%
- Also interesting: US initial jobless claims, US import price index
Friday 14th June
- India Wholesale Price Index (May): GS +5.0% yoy, Consensus +4.8%, Previous +4.9%
- Euro Area Harmonised CPI (May): GS +1.4% yoy, Flash 1.4%
- US Producer Price Index (May): GS +0.1% mom, Consensus +0.1%, Previous -0.7%
- US Core Producer Price Index (May): GS +0.07% mom, Consensus +0.1%, Previous +0.1%
- US Current Account Balance (Q1): Consensus -$111.0B, Previous -$110.4B
- US Industrial Production (May): GS flat, Consensus +0.2% mom, Previous -0.5%.
- US Capacity Utilization (May): GS 77.8%, Consensus 77.8%, Previous 77.8%
- US Consumer Sentiment (June): GS 83.0, Consensus 84.5, Previous 84.5
SocGen recaps the key issues for the week ahead:
The German Constitutional Court will hold a hearing on the ESM and the OMT
Markets will be keenly awaiting any news from the court’s hearing on the legality of these arrangements. The court has already given a preliminary ruling in September last year, which placed some conditions on Germany’s involvement. It imposed a cap on Germany’s contribution to the ESM, which cannot be raised without the approval of the German parliament.
The latest hearing will examine, amongst other things, the OMT programme and its potential impact on Germany via the ECB’s balance sheet.
Mr Draghi was asked at the ECB press conference whether the ECB’s legal documentation of the OMT was ready. He said that it would be published soon.
Bank of Japan will wait before taking further action
Since the Bank embarked on its bold policy to double the monetary base in two years, JGB yields have become much more volatile. The Bank is apparently considering trying to dampen this volatility by lending funds out to two years. However, in terms of further easing measures, we do not think it is ready to act. It will want to see the impact of the measures already taken before considering fresh action so we expect policy to be left unchanged at this week’s meeting.
European inflation readings to confirm pick-up in May
In many European countries, inflation was pushed down in April by the timing of Easter. This pointed to higher inflation in May. The flash estimate for Germany displayed such behaviour and we expect the French data to follow suit. The euro area flash estimate of 1.4% yoy for May after 1.2% in April should be confirmed.
Source: Goldman and SocGen