Talking Points:
- The coming week sees significantly fewer 'high'' rated events on the calendar than last week, with only three data releases and one central bank rate decisions worth paying attention to.
- The ECB rate decision this week has a very low bar set for expectations, given that policy was preset until at least "summer 2019" at the policy meeting last month.
- The Q2'18 US GDP report is likely to show growth above +4%, offering a chance for rate expectations to recover at the end of the week.
Join me on Mondays at 7:30 EDT/11:30 GMT[1] for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.
07/25 Monday | 01:30 GMT | AUD[2] Consumer Prices Index (2Q)
Inflation in Australia is expected to return back into the lower part of the Reserve Bank of Australia’s +2-3% target range for the first time since Q1’17. Due in at +2.2% from +1.9% (y/y), the Q2’18 quarterly inflation report represents a potential turning point for the beleaguered Australian Dollar. With the labor market now showing improvement, signs that inflation is stabilizing should prevent rate expectations from deteriorating any further. Currently, rates markets are pricing in a 9% chance of a 25-bps rate cut by December 2018. It will take several successive inflation reports above +2% in order to get the needle moving on RBA rate expectations again.
