During a heavy week of event risk out of the UK, retail sales growth is anticipated to soften in the month of June to an annualized rate of 3.5 percent – a seven-month low.
Wednesday represents a huge day of event risk for US asset markets, as traders will face not only critical inflation data, but also Federal Reserve Chairman Ben Bernanke’s testimony before the House panel regarding monetary policy.
European asset markets have been consolidating at critical levels after the European Central Bank maintained that interest rates remain accommodative after their July monetary policy meeting, signaling the potential for another round of policy tightening this year.
On Friday morning, the release of the US import price index and advance retail sales hold major market-moving potential, as the news will reflect two of the most important topics relating US asset trading: inflation and consumption.
Retail sales in New Zealand are expected to have rebounded in May, as a tight labor market and rising wages fuel consumer spending. New Zealand companies, which have experienced a commodity-price led boom, have found it increasingly difficult to attract workers, which is stoking wages and fanning consumption growth.
Fundamental data out of Japan isn’t likely to be impressive, as consumer confidence for the month of June is anticipated to ease back further below the 50 level – signaling that the majority of people surveyed remain pessimistic about the economy.
While the Bank of Japan’s meeting this week is virtually guaranteed to show a steady hand at 0.50%, we’ve seen the Japanese yen gain some ground as risk aversion grows in the market – signaling that a rate hike isn’t necessarily needed to unwind carry trades.
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