Daily Brief, July 11 – Economic Events Outlook – CPI Reports on the Cards
Arslan Butt • 2 min read
Good morning, fellas.
The market continues to trade with a weaker dollar sentiment, causing a drop in the US dollar after Federal Reserve Chairman Jerome Powell set the stage for a rate cut later this month, pledging to “act as appropriate” to warrant the world’s largest economy ability to maintain a decade-long expansion.
Looking ahead at the economic calendar for today, we have a series of inflation reports from the Eurozone and the United States. Let’s dig deeper.
Watchlist – Key Economic Events Today
EUR – German Final CPI m/m – 6:00 GMT
Destatis is due to release this figure during the European session. Germany is one of the major business centers in the Eurozone and economic events play a good role in the valuation of the single currency Euro. Economists are expecting the final CPI to remain unchanged at 0.4%.
BOE Financial Stability Report – 9:30 GMT
The BOE Governor Mark Carney is due to hold a press conference about the financial stability report in London.
What’s the Financial Stability Report?
It’s an evaluation of health in the financial system and potential risks to financial stability. The evidence on anxieties and shortcomings can provide insight into the future of monetary policy. As we know, the UK is struggling with inflation, which is why they haven’t hiked interest rates. Therefore, investors will be monitoring it closely for further clues on the rate hike.
USD – CPI m/m – 12:30 GMT
The inflation figures are highly correlated with labor market figures as it’s all about consumption and people usually consumes more when they have a job or their business is booming. Looking at the US labor market report for June 2019, the figures were mixed. The US Non-farm payrolls progressed by 224K jobs last month which is the highest figure in five months. However, the unemployment data came out at 3.7% missing the forecast of 3.6%. The average hourly earnings fell from 0.3% to 0.2% in June.
Here’s the thing – a drop in average hourly earnings could diminish people spending pattern and can cause a drop in demand, ultimately lowering the inflation rate.
Economists are expecting a slight drop in the US inflation figures from 0.1% to 0.0%. The core inflation is expected to rise from 0.1% to 0.2%. Let’s wait for the actual figures.
ECB Monetary Policy Meeting Accounts – 11:30 GMT
Recalling the recent policy meeting, the European Central Bank did not make any change to its policies. In fact, the ECB President Mario Draghi acknowledged the economic slowdown and showed concerns over geopolitical tensions around the globe.
The current meeting minutes will present a look into the discussions within the Governing Council. All we need to see is what they are expecting to do about the recent worries over the economic slowdown. Any remarks about the next rate hike (which is expected by the end of 2019) will help us drive further trends in Euro.