The upcoming week is packed with key economic events that could significantly impact the markets.
Here’s a detailed look at the key events to watch from 17th to 23rd June 2024, covering important announcements from China, Australia, the UK, and Japan.
China kicks off the week on Monday, June 17th, with the release of its economic data at 2am GMT. The reports on Fixed Asset Investment, Industrial Production, and Retail Sales will be under close scrutiny.
Recent data from China has painted a mixed picture, showing a stronger recovery in external demand but weak domestic consumption. Expectations are that Industrial Production will edge lower to 6.4% year-on-year from 6.7%. This slight decline may reflect potential issues in the supply chain or a dip in global demand.
On the other hand, Retail Sales are expected to improve to 3.0% from 2.3%, indicating a modest recovery in domestic consumption and a hint of improving consumer confidence. Fixed Asset Investment is anticipated to remain unchanged at 4.2%, suggesting that investment in infrastructure and other fixed assets is steady, possibly supported by government initiatives.
Traders will be looking for signs of stabilisation to gauge the success of China’s accommodative policies. Lower-than-expected readings could signal the need for quicker policy support to meet the 5% growth target.
On Tuesday, June 18th, all eyes will be on the Reserve Bank of Australia (RBA) as it announces its interest rate decision at 4.30pm GMT. The RBA has maintained a steady interest rate of 4.35% for four consecutive meetings, despite core inflation exceeding expectations in Q1.
Economic indicators in Australia have been mixed, with weak retail sales and GDP figures contrasting with a firm labor market and solid inflation data. The RBA is expected to keep rates on hold at 4.35% for the fifth consecutive meeting. The rates market is pricing in a ~45% chance of a 25 basis point rate cut by December, with a full cut expected by April.
A neutral tone is anticipated from the RBA, focusing on balancing demand and supply without ruling out future rate adjustments.
The Bank of England (BoE) takes the spotlight on Thursday, June 20th, with its interest rate decision at 11am GMT. In May, the BoE maintained its interest rate at 5.25% with a 7-2 vote, with dissenters favoring a 25 basis point cut.
The dovish stance was due to revised CPI forecasts and potential inflation risks. The BoE is likely to keep rates on hold unless the upcoming inflation report significantly deviates from expectations. Current market sentiment shows minimal chance for a rate cut in June.
Stability in the inflation rate and the BoE’s cautious approach will be critical in preventing inflation from becoming entrenched above 2%. Historical precedents, such as the BoE’s actions in 2008 and 2016, illustrate how central banks navigate inflationary pressures with cautious policy adjustments.
The week wraps up with Japan’s inflation rate report on Friday, June 21st, at 11.30pm GMT. Japan’s focus is on evaluating trend inflation towards the 2% target, particularly observing services prices, corporate wages, and price-setting behavior.
In April, Japan’s nominal wages had grew by 2.1%, indicating a potential wage-price spiral. Headline and core inflation rates have eased to 2.5% and 2.2% respectively.
The market will look for signs of stable price growth around the 2% target. Persistent wage growth feeding into inflation could prompt further rate hikes from the Bank of Japan (BoJ), impacting currency and market dynamics.
