Fed meeting minutes and Economic data!
Last week ended with increasing US Producer Inflation and a sharp drop in Consumer expectations and estimates. On the other hand, China’s regulatory curbs remain in their place, while SP500 ended in a record high. In the week ahead, while still, we have these concerns with increasing Coronavirus infections all around the globe, economic data including GDP from Japan and Eurozone, Inflation from Canada, UK, and Japan, RBNZ meeting, and FOMC minutes will be in the spotlight. Let's take a look at the most important news and events of the week ahead.
US retail sales - Tuesday
After Monday's Chinese data, another Retail sale of the week, which we have to follow closely, is the US Retails Sales on Tuesday. Same as China and many other economies, Retail sales response to man other factors sometimes increase, sometimes decreased; however, it seems US stimulus and cash checks were the main market drivers. These unemployment benefits will end in September. Retail sales directly depend on consumer confidence, which sharply decreased in Friday's Michigan university data. On the other hand, we had a summer holiday, which can support the sales, so while market participants are waiting for a 0.2% decrease, it is confusing and getting hard to predict what will happen!
UK Unemployment - Tuesday
With fast improvement over the last few months unemployment rate fall back to 5.8% in June from earlier 7.2%. With easing the restriction, even with one month delay, the environment remains positive, especially with vaccination improvement and summer Holidays. The latest research of the Bank of England was more optimistic for the Labor market. Earlier this year, the outlook was much higher, and now it is decreased to a 5.2% unemployment rate for 2021 and 4.7% in the second quarter of 2022. With this outlook, British Footsie still seems to hold its overall uptrend.
New Zealand Interest rate decision and monetary Policy - Wednesday
The reserve bank of New Zealand will meet on Wednesday. As it was the first major central bank to start tapering the asset purchasing, now we are waiting to see it as the first central bank to raise the interest rates. To get to this point, strong job data was very important. So far, the expectation is for 25 basic point raise in the rates. On the other hand, we have some risks here, including virus developments and China's regulations that can decrease the recovery pace, which can highlight as the reason for holding current policies! With the estimated rate hike decision, Kiwi is expected to maintain its stronger position against its crosses!
Federal Reserve Meeting Minute - Wednesday
On Wednesday, when the FED will release the minutes of its July meeting, the policymakers' views on the interest rate and tapering timetable will be more transparent for investors and their outlook on the economic recovery. With the solid recovery in the labor market, many market participants and investors are now pricing more on hawkish policies. At the same time, some FOMC members also mentioned that tapering could announce in the September meeting and start from November or with the beginning of the New Year. As we will not have the FED meeting in August, and the September meeting seems so far away, these minutes do not appear to affect the market so much.
