Market outlook for the week of June 10 – 14 | Forexlive

This week features a relatively light calendar in terms of economic events, which is typical of the period following the NFP report. However, there are some very important events to watch.

On Tuesday, the UK will publish the change in the number of claimants, the average income index 3 million a year and the unemployment rate. These figures will provide insight into the UK job market and salary trends.

Wednesday’s focus will be on the US, with the release of CPI data and the FOMC monetary policy announcement. These two events are highly anticipated and could have a substantial impact on the market.

On Thursday, attention will shift to Australia, where employment change data and the unemployment rate will be released. Meanwhile, in the US, we will get PPI m/m and the unemployment rate.

Finally, on Friday, the BoJ will make its monetary policy announcement, a key event for Japan. In addition, the US will receive preliminary UoM consumer sentiment data and preliminary UoM inflation expectations data, providing further insight into the consumer outlook and inflation expectations.

In the UK, the consensus for the change in the number of claimants is to increase from 8.9 thousand to 10.2 thousand. The average income index 3 million a year is likely to remain at 5.7%, as it was last month, and the unemployment rate is expected to remain unchanged at 4.3%.

Overall, UK labor market data points to a cooling trend. The Monetary Policy Committee (MPC) will closely examine the impact of the 10% increase in the National Living Wage. Analysts at Citi expect this increase to have boosted regular private sector wages by 1.1% m/m, higher than the CPM forecast. However, Citi expects the MPC to remain cautious.

All eyes are on the US CPI numbers. The consensus for m/m data is 0.1%, down from 0.3% previously, while the annual CPI is expected to remain stable at 3.4%. For CPI excluding food and energy, the m/m figure is expected to increase by 0.3%, while the annual figure is expected to print 3.5%, slightly down from 3.6% previously.

Overall, US CPI is expected to begin to decline in the coming months, although this decline is likely to be gradual. A slight decrease in the prices of basic goods is also expected.

After the latest jobs data, which beat expectations, the Fed is expected to maintain current monetary policy at this week’s meeting, keeping the federal funds rate at 5.25-5.5%. Policymakers are likely to acknowledge that inflation is slowing, but will probably stress the need for more data to determine whether it will reach the desired 2.0% target.

Analysts at Citi suggest that Fed Chairman Jerome Powell may focus on indicators such as job openings, which show that the labor market has rebalanced, as further evidence that inflation will ease in the coming months. next. Powell is expected to deliver a dovish message.

As a reminder, in March, the Fed signaled three rate cuts for 2024 and three for 2025. However, given that inflation remains stubbornly high, it now seems unlikely that the Fed will implement three cuts this year, with two being the scenario most likely. .

In Australia, the consensus employment change is a decline from 38.5K to 30.0K, and the unemployment rate is also expected to fall from 4.1% to 4.0%.

The participation rate is likely to remain unchanged at 66.7%. The projected drop in the unemployment rate can be attributed to strong employment gains ahead of the winter holiday season and year-end financial sell-offs, according to Citi.

Westpac predicts a higher-than-expected increase in employment (45,000) due to a dynamic that has been increasingly prevalent in recent years, where more people than usual are out of work during the school holiday months, but then they get a job the next month.

Expectations for US core PPI m/m is 0.3% vs. 0.5% previously and for PPI m/m is 0.2% vs. 0.5% previously. The prices of basic goods have increased recently and may put pressure on the prices of consumer goods. However, Citi analysts point out that businesses do not have as much pricing power as they once did, so higher production costs may not necessarily lead to higher CPI consumer prices.

At this week’s meeting, the DB is expected to keep rates unchanged. However, there is a possibility that the Bank will signal its intention to cut its purchases of Japanese government bonds (JGB) for the July-September period. While markets are anticipating a rate hike in July, many variables could affect that decision in the coming weeks.

Inflation indicators in Japan have been mixed recently and the BoJ may prefer to see more complete data on price trends and wage developments before deciding on another rate hike. Economic growth figures will also play a decisive role in this decision, and concerns about wages remain after the agreements from the spring wage negotiations.

Analysts at Wells Fargo suggest the BoJ may reduce the pace of its bond purchases to 5 trillion yen a month from the current 6 trillion yen, as talk of a possible reduction has been prominent in recent weeks.

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