- Markets will be keeping a close an eye on what action/if any the PBoC take to try and keep Chinese growth prospects on course.
- Main releases this week come in the form of US and UK CPI reports and the FOMC minutes release
Last week saw a bulk of the focus around the market place centre around China after the PBoC lowered the reference rate of the CNY against the USD
three times
, subsequently causing quite a stir in the market. Despite, the PBoC reducing the severity of the adjustment towards the end of the week, market
participants will still be keeping a close eye on activity at the central bank, particularly with multiple analysts suggesting that the PBoC could
ultimately have to carry out further rate cuts to stimulate economic activity.
In terms of scheduled releases, the main focus will likely be on the latest US inflation report given the data sensitivity of the Fed.
In terms of expectations for the event, M/M CPI is expected to slip to 0.2% from 0.3% with the Y/Y reading expected 0.2% (prev. 0.1%).
Should the market be presented with a stellar inflation report from the US then participants will likely continue to suggest that September is an
appropriate time for the Fed to lift rates
. However, if the report leads to concerns over the US inflation report and events in China continue to paint a dreary picture of global growth then
participants may grow cautious over the Fed lifting rates next month.
Elsewhere in the US, markets will be presented with the latest set of minutes from the FOMC. However, expectations for the event are relatively muted
with many analysts suggesting that they won’t provide too much further clarity on the timeframe for Fed lift-off with the central bank instead continuing
to assess data points.
Across the pond in the UK, next week sees the latest UK inflation figures
which will naturally provide food for thought for those looking to see if a 2015 BoE hike is definitely off the cards. In terms of expectations for next
week, the headline Y/Y is expected at 0.0% (Prev. 0.0%) and M/M expected at -0.3% (Prev. 0.0%), therefore all-in-all it isn’t expected to
be the most inspiring of reports.
In terms of Eurozone events, market attention continues to drift away from Greece after the third bailout package received Greek approval last week.
The issue will likely be put before the German Parliament on Tuesday but the vote is largely expected to be somewhat of a formality given the obstacles
that have already been removed.