Events to Look Out for Next Week

• Consumer Price Index (JPY, GMT 23:30) – The June core headline inflation could rise to 0.2% y/y from 0.1% y/y in the previous month.

Tuesday – 20 July 2021

• RBA Meeting Minutes (AUD, GMT 01:30) – The RBA began tapering at its prior meeting, while keeping rates at record lows. Governor Lowe indicated he wants to get policy back to normal as soon as possible so the bank can be prepared for the next downturn. He also believes the low 4% jobless rate is full employment. He also suggested again that rate hikes are unlikely before 2024.
• PBoC Interest Rate Decision (CNY, GMT 01:30) –The People’s Bank of China rolled over just a portion of medium term policy loans that expire, which indicates that the central bank is keeping policy settings largely unchanged for now. The PBoC could take steps to boost lending, with a cut in the reserve ratio requirement (RRR), though officials were eager to stress that this won’t be a return to broad based easing measures.
• Housing Starts & Building Permits (USD, GMT 12:30) – Housing starts are expected to climb to a 1.620 mln pace from 1.572 mln in May and 1.517 mln in April, versus a 15-year high of 1.725 mln in March. Permits are expected to improve to 1.700 mln from 1.683 mln in May, versus a 15-year high of 1.883 mln in January. We saw a new 15-year high for new home sales in March, and prior 14-year highs for pending and existing home sales in 2020.
• BOJ Meeting Minutes (JPY, GMT 23:50) – The BOJ minutes should provide further guidance for 2021.

Wednesday – 21 July 2021

• Crude Oil Inventories (GMT 14:30)

Thursday – 22 July 2021

• Interest Rate Decision and Press Conference (EUR, GMT 11:45 & 12:30)  – The focus at next week’s council meeting will clearly be on monthly PEPP purchases as the ECB finally completed its strategic policy and, as expected, ditched the previous definition of price stability as below but close to 2% over the medium term in favour of a 2% target. The fact that the central bank stopped short of an average target of 2% means there is no automatism that would force the ECB to target a headline above 2% for the next couple of years to compensate for the recent undershoot. Still, at the current juncture the new and clearer target signals that the ECB will further strengthen its commitment to maintain easy monetary policy conditions beyond the immediate crisis.  Against that background Lagarde hinted at a tweak to the forward guidance at the July 22 policy meeting, although we continue to expect the central bank to start scaling back monthly purchases later in the year. PEPP is also likely to end as scheduled, although asset purchases will remain a feature of the ECB’s policy set, albeit likely with less flexibility on the distribution of purchases once the immediate crisis is behind us.

Friday – 23 July 2021

• Retail Sales (GBP, GMT 06:00) –The Retail Sales are seen spiking at 29% y/y in June from 24.6% y/y last month.
• Services and Manufacturing PMI (EUR, GMT 07:30 – 08:00) –The preliminary Eurozone Services and Composite PMIs are expected to revise higher for July at 60.1 from 59.3. German preliminary Services PMI is forecasted to show a slight recovery, at 59.3 from 57.5 while the Manufacturing PMI could decline slightly.
• Retail Sales (CAD, GMT 12:30) –The final Retail Sales for May and core are seen dipping to -5% m/m.
• Services and Manufacturing PMI (USD, GMT 13:45) – The US prelim. Markit PMI manufacturing index could come in lower at 61.5 for July from 62.1. Services could spike at 70.0 m/m from 64.6 m/m.