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right now, mostly due to the recovery being seen in the Euro Zone right
now, will reduce the risk of inflation remaining below the Banks target.
However the Bank also warned that inflation will likely stay negative
for some time yet. The overall economy too, though improving some,
still suffers from weak demand and a continuing negative output gap.
On the whole then, while the Bank left rates on hold this meeting, their
overall tone on the economy and inflation remains quite dovish though
dont expect any more easing from the Bank. When the Bank cut rates
last, in March of this year, they said that that was the last easing
measure it would do, despite their dovish forecasts for inflation. We
shall see..
recent actions in cutting rates and in their dovish tone, focus will be on
what he has to say especially in terms of monetary policy if that is
talked about at all. The other data of interest this week will be business
confidence which has been weakening as of late pointing to continued
weakness in the business sector. This weakness in the business sector
was seen last week as CAPEX numbers for the first quarter came in
lower than expected.
NZD This week the main focus for the Kiwi and New Zealand
financial markets will be the RBNZs monetary policy meeting and
decision. The question is, after raising rates three times last year, will the
Bank cut rates now instead. Overall economic conditions, including
inflation, have been weakening quite a bit since late last year and more
and more calls for a rate cut have been coming. This would be a pretty
big turn around for the Bank but given the current environment in New
Zealand, economically speaking, a rate cut can not be out of the
question. If they do cut rates, focus will be on what the Bank expects
going forward, whether a cut in rates will be seen as the beginning of a
rate cutting cycle or whether it will be more of a one-off event at least
for the time being. Also, focus will be on the Banks general assessment
of the New Zealand economy and inflation prospects going forward.
CNY Inflation data for the month of May will be the main data out of
China this week and a lower number I suspect will help revive and
reinforce the recent huge uptrend that has been seen in China stocks as
of late. Other data of focus will be industrial production and retail sales
data which will be important given the overall weakness that persists in
the Chinese economy.
JPY The second reading of first quarter GDP will be in focus for
Japanese markets this week. The first reading looked pretty good
actually as both annualized and quarterly readings came in above
expectations. Therefore, any improvement in the data will be a good
sign for the Japanese economy which continues to remain weak overall.
However there has been some improvements recently which have
helped push back the need for any more BoJ easing. At least for now. It
would seem that the whole world had a pretty good first quarter in
terms of growth, it is the second quarter which is looking like it will be
weaker and so this is where the focus is right now, including for Japan.
EUR Greece. Yes, this small nation continues to be a big story for the
markets right now as the government continues to push back on
demands for reforms by the Troika in order to unlock more funding.
The government also continues to do everything it can to NOT pay the
IMF or anyone else for that matter, with news towards the end of last
week that they will be bundling payments to the IMF which would hold
off any payments to the IMF till the end of June this year. They also did
not pay their June 5th payment to the IMF. On the whole, things still
remain fragile and in the end there will be losses for more than just
Greece. The lenders too will likely have to budge, especially if parties
like Germany really do indeed want Greece to stay in the Euro Zone.
That is the real question though.does the Troika really want Greece to
stay in the Euro Zone and does Greece really want to stay in the Euro
Zone? The latter question seems to be a yes if looking at the people for
the answer but not so much so if looking at the government and this
was proved in a small way last week as news surfaced that the Greek
government is looking to hold snap elections if their Creditors do not
budge. As for the Troika though, I am not sure if even they know the
answer to that question yet but in the next couple of weeks I think
things will (finally) be made more clear for both sides.
USD No matter which way you slice it, the May jobs report last week
as better than expected overall and shows a pretty strong jobs market in
the US. The Non-Farm Payrolls number came in better than expected
and wages came in better as well and so some good signs of the strength
that exists in the US jobs market right now. The one part of the overall
jobs report that was a little worse than expected was the unemployment
rate which ticked a little higher. However this is not a concern as a tick
higher in the jobless rate with such a large gain in overall jobs is very
likely an indication that more people are getting into the jobs market to
look for jobs. A good sign therefore going forward for both the jobs
market and overall US economy but also in terms of Fed rate hikes. The
US Dollar continued its bull run on the jobs report release as the market
increased its rate hike expectations, this time putting September as the
next possible date for a rate hike.
CAD The Canadian jobs market also showed some improvement as
data released last week showed a larger than expected gain in jobs for
the month of May. The participation rate also ticked higher as did
wages. Both good signs and a positive indication of the overall
Canadian economy especially given last weeks dismal GDP report. One
note of caution though on the jobs report is that this tends to be a very
volatile report and so while the jobs market looks pretty good this
month caution should be given for next months data.
Overall Sentiment
US Dollar
Positive
Euro
Positive
Pound
Positive
Canada Dollar
Positive
Australian Dollar
Positive
Japanese Yen
Negative
Neutral
Strength Rating
Economic Calendar
Region
Event/Data
Expected
Date
Time (EST)
Japan
Q1 GDP Annualized
2.4
06/07
7:50pm
Japan
Q1 GDP q/q
0.8
06/07
7:50pm
China
Trade Balance
44.95B
06/07
n/a
Germany
Trade Balance
19.4B
06/08
2am
Germany
06/08
2am
China
CPI y/y
1.3
06/08
9:30pm
China
-4.5
06/08
9:30pm
Australia
06/08
9:30pm
United Kingdom
06/09
5am
Australia
06/09
8:30pm
Australia
06/09
10:50pm
United Kingdom
06/10
10am
New Zealand
06/10
5pm
New Zealand
06/10
5pm
Australia
Employment Change
06/10
9:30pm
Australia
06/10
9:30pm
Australia
Employment Rate
6.2%
06/10
9:30pm
China
Retail Sales
10.1%
06/11
1:30am
China
Industrial Production
6%
06/11
1:30am
United States
06/11
8:30am
United States
0.5%
06/11
8:30am
United States
91.5
06/12
10am
3.5
11K