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06744 CC Trader Talk V2

Europe

On the economic front, the Bank of Japan (BOJ) and the European Central Bank (ECB) announce their decisions on policy and interest rates. For the ECB, no change is expected here but some discussion on the outlook of quantitative easing is likely. In fact, analysts are on the lookout for fresh signals as to the timing of a tightening monetary policy after the recent hawkish remarks from ECB President Draghi. The European second quarter growth may show signs of a further easing of inflationary pressures which tend to put the Central Bank on the cautious side. Although, Draghi’s remarks have boosted speculation that the ECB could announce a reduction in asset purchase (QE) as soon as September.

Japan

In Japan, the BOJ is set to reveal its latest quarterly outlook report, containing new projections for economic growth and inflation, and simultaneously announces its policy decision. Changes to current policy are not expected as subdued inflation remains an issue.

UK

Other key data highlights include UK retail sales and inflation, which will help to gauge the timing of the first rate hike by the Bank of England. A steeper than expected rise in UK inflation has been one of the reasons why policy makers in England should opt for a rate hike. This is the reason why the June CPI release is eagerly awaited for. The inflation not only surpassed the target of the Bank of England, but also reached a nearly four-year high. On the other hand, the consumer spending has been squeezed, as a result of falling wages.

China

Meanwhile, a second quarter GDP data release from China will be eyed for signs of the economy slowing. The annual growth rate in the second quarter is expected to decrease when compared to that of the first quarter. Data showed that expansion in the three months to June was below that seen in the first quarter and was the lowest for the year, supporting a softer quarter two growth in the current economic growth scenario.

US

The US initial jobless claims is expected on Thursday, with two hundred and forty seven claims expected, compared to a thousand less a week earlier. Moreover, the US earnings season begins to move into high gear, with a wide selection of US firms reporting earnings.