Summary:

  • EMU inflation expected to accelerate

  • Will PCE inflation reading from the US justify a move in dot plot?

  • Consensus suggests that the Canadian economy did not grow in April

The end of a trading week will be marked by the European inflation reading. Investors will analyze the figures in order to see whether Mario Draghi was right saying that he sees inflation accelerating. Apart from that we will get PCE inflation data from the US and monthly GDP report from Canada. In the morning (9:30 am BST) the UK GDP reading will take the stage but it is the final reading for Q1 therefore no major reaction is expected.

10:00 am BST – Eurozone Inflation for June. During the latest ECB meeting Mario Draghi expressed his belief that the underlying inflation in the eurozone is accelerating. Today we will have a chance to see whether he was right or not. The headline CPI inflation is expected to pick up from 1.9% YoY to 2% YoY while the core measure should show a decline from 1.1% YoY to 1% YoY. In case we see reading like that or better investors should get ready for more hawkish comments from ECB members during the upcoming months.

1:30 pm BST – US, PCE Inflation for May. The PCE inflation is a measure used by the Fed when determining inflation target. As the latest dot plot showed central bankers’ consensus move to 4 hikes this year a decent uptick in inflation could reinforce this view. The headline measure is expected to advance from 2% YoY to 2.2% YoY while the core one should show an uptick from 1.8% YoY to 1.9% YoY (just a notch below Fed target of 2%). Simultaneously data concerning personal income and spending will be released and in both cases an advance of 0.4% MoM is expected.

1:30 pm BST – Canada, GDP report for April. One thing that differs Canada from other developed economies is the fact that this country releases its GDP data on a monthly basis. After quite a decent first quarter the beginning of the second one does not look as pleasing. The Canadian economic growth in April should remain intact on a MoM basis (0%). In the YoY terms a deceleration is expected as the GDP growth should slow from 2.9% YoY in March to 2.5% YoY in April.

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EURCAD managed to bounce towards the 23.6% retracement level of the last major upward impulse. After failing to break above this obstacle the pair pulled back towards the uptrend line. As price remains within the support zone sellers should be on guard. Source: xStation5