Next week – Top 5 events: UK inflation rate; Canada’s inflation rate; Powell’s testimony about Japan’s inflation rate; German IFO business climate -by Ecork

FX Week Ahead Overview:

  • Next week will provide more insights into weak growth and record inflation around the world.
  • UK, Canadian and Japanese inflation data released in May will keep markets focused on how central banks plan to reduce price pressures.
  • Federal Reserve Chairman Jerome Powell’s testimony to Congress this week comes just days after the Federal Reserve raised interest rates by 75 basis points for the first time since 1994.

For the whole week, please visit DailyFX Economic Calendar.

Wednesday 06/22 | 06:00 GMT | GBP Inflation Rate (May)

UK price pressures remain well above the BoE’s comfort level, and the upcoming slate of inflation data will do little to allay fears. According to a Bloomberg News survey, UK inflation for the month of May (CPI) is set at +0.6% m/m from +2.5% m/m and +9.1% annual from +9% annually, while core inflation is expected The ratio is +6% on an annual basis from +6.2% on an annual basis. Just last week, the Bank of England’s Monetary Policy Committee promised to act “more aggressively” to combat multi-decade spikes in price pressures. However, any evidence that inflation pressures have peaked could confirm the Bank of England’s balanced fears of slowing growth, Which in turn could weigh on the British pound.

Wednesday 06/22 | 12:30 GMT | Canadian Dollar Inflation Rate (May)

Price pressures continue to rise in Canada, despite aggressive measures taken by the Bank of Canada in recent weeks to stem the rapid rise in the cost of living. According to a Bloomberg News survey, Canada’s May inflation (CPI) is set at +1% m/m from +0.6% m/m and +7.4% y/y from +6.8% y/y, while core inflation from Expected at +0.8% yoy from +0.7% yoy and +5.9% yoy from + 5.7% yoy. BOC’s June Policy Statement It included the phrase “the board is prepared to act more aggressively if necessary to meet its commitment to achieving the 2% inflation target.”And Canadian inflation data for May could help spur speculation of a 50 basis point rate hike when policy makers meet in mid-July.

Wednesday 06/22 | 13:30 GMT and 06/23 Thursday | 14:00 GMT | US Dollar Fed Chair Powell delivers the semi-annual monetary policy report to Congress

Federal Reserve Chairman Jerome Powell will deliver his semi-annual testimony before the US House of Representatives and the US Senate on Wednesday and Thursday, a week after the Fed’s June rate decision that led to the first rate hike of 75 basis points since 1994. At the Fed The Fed’s monetary policy report, which was released on June 17, noted that “TThe Committee’s commitment to restoring price stability Which is essential to maintaining a strong job marketUnconditional.US inflation rates are steady near 40-year highs, which is likely to attract the most scrutiny among Democrats and Republicans alike. Focusing on severe inflation pressures may be the needed catalyst for US interest rate markets to raise interest rates by another 75 basis points in July.

06/23 Thursday | 23:30 GMT | JPY Inflation Rate (May)

Japanese inflation continues to rise, in part due to a weak Japanese yen and persistently high coal and oil prices (Japan imports more than 90% of the energy it consumes). According to a Bloomberg News survey, Japan’s May inflation rate (CPI) is set at +2.6% y/y from +2.5% y/y and core inflation is expected unchanged at +2.1% y/y. April’s 2.5% rise year-over-year was the fastest since October 2014. Despite mounting political anxiety, the Bank of Japan doubled (tripled?) its commitment to quantitative easing with yield-curve control policy last week, and incoming inflation data may see Japanese bond markets are under renewed pressure.

06/24 Friday | 08:00 GMT | EUR German IFO Business Climate (June)

Estimates of European growth continue to decline, no doubt linked to the Russian invasion of Ukraine. But the hangover from the coronavirus pandemic is also a contributing factor, and an unwillingness for more fiscal stimulus in the face of multi-decade spikes in inflation suggests that conditions for stagflation are taking shape across the eurozone. The German Ifo Business Climate survey for June should show continued weak conditions in the euro zone’s largest economy will not benefit the euro as the echoes of the euro zone debt crisis grow amid a sharp rise in peripheral borrowing costs after the European Central Bank in June. rate resolution.

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— Written by Christopher Vecchio, CFA Analyst, Chief Strategist

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