FannieMae and FreddieMac aside, the U.S. financial markets are in a serious downslide and there appears to be no end to it. Aussie and Euro are approaching historic highs, the US equities markets are retracing dangerous downside resistance levels and crude oil prices are maintaining historic levels. Dollar is in retreat across the board and there are expectations of further downside. The technicals are in play here more than at any other time in the recent past, as the economic calendar has no major, market-moving events in the next week or two.
Looking ahead for Asian session(from CEP News desk):
In addition to the release of the Japanese Cabinet Office's monthly economic report for July, the Bank of Japan's interest rate announcement is scheduled for Monday evening. The BOJ is expected to hold off on any rate movement this month. The bank's release of its monthly report of recent economic and financial developments is another highlight of the day.In Australia, aside from the release of the Westpac Leading Index of Economic Activity, RBA Governor Glenn Stevens is scheduled to speak on the subject of 'Challenges for Economic Policy' at an event organized by the Anika Foundation and Australian Business Economists. The Reserve Bank of Australia's July minutes will also be published.
Monday: (All times in EDT.)
21:30 AU Reserve Bank's Board July Minutes
July -14 JP BOJ Target Rate 15-July Exp: 0.5% Prior: 0.5%
July -14 JP Cabinet Office July Monthly Economic Report
Tuesday:
0:00 JP Tokyo Condominium Sales (Y/Y) June Prior: -17.7%
2:00 JP BOJ Monthly Report
19:50 JP Tertiary Industry Index (M/M) May Exp: +0.2% Prior:+ 1.8%
20:30 AU Westpac Leading Index (M/M) May Prior: +0.4%
22:30 AU Climate Minister Penny Wong Speaks in Canberra
23:05 AU Reserve Bank Governor Stevens Speaks in Sydney
14-30 July AU NAB Business Confidence Q2 Prior: -4
Looking ahead for European session(from CEP News desk):
It's a big day in the UK with the release of inflation data. Although core UK inflation is expected to remain steady, headline CPI is expected to tick higher in June. Economists expect annualized core inflation to rise 1.5% following a matching increase in May. Headline inflation is expected to rise 3.6% following the previous rise of 3.3%.Economists from Barclays Capital forecast a 0.4% rise in the CPI in June month-over-month, and a 3.5% increase year-over-year. "The key drivers of the monthly change are a 3.5% m/m rise in energy prices are linked to a 6.5% increase in petrol price and a 0.3% rise in services prices notably a 6% m/m rise in airfares, stronger than the seasonal average of recent years, reflecting the fact that some large UK carriers raised air passenger duty rates in the month," wrote the Barclays economists.
Economists from Capital Economics share the same view, putting the blame on increasing petrol prices. "The consumer prices figures have provided some nasty surprises in the last few months. Although inflation was expected to move above 3% in May - triggering only the second ever open letter from the Governor of the Bank of England to the Chancellor - the outturn of 3.3% was higher than expected. The picture is unlikely to improve in June's figures. If nothing else, petrol prices are likely to have registered another chunky increase in response to the latest surge in oil prices to close to $140 per barrel," the economists wrote.
The Centre for Economic Research (ZEW) will announce its Germany and euro zone economic sentiment indicator for July as well as the business sentiment figure for Germany on Tuesday. Economists are forecasting the ZEW German economic sentiment indicator to reflect continued pessimism regarding the economic outlook and fall to -55.0 after slipping to -52.4 in June. The German current situation indicator is also expected to decline further, going to 32.0 in July from the previous month's 37.6 level.
Economists from BNP Paribas predict that the ZEW survey will serve as a confirmation of economic deterioration. "The business sentiment index, which has generally held just below -40 since January 2008, weakened to a new threshold of-52.4 in June, the lowest level since year-end 1992. Given the size of June's decline, the July survey is expected to confirm the past deterioration, without necessarily building on it. The business sentiment index could level off temporarily or decline slightly. The current conditions index, in contrast, could drop off much more sharply after declining slightly in June, even though it still held above the historical average," wrote BNP Paribas.
Economists from Citigroup said they think that the ECB rate hike and the ongoing increase in oil prices have had a negative impact on the German economy. "The sixth consecutive fall in incoming orders will add to the downturn in business expectations. If our forecast is correct, this would be the lowest reading since late 1992, a time when Germany was in recession," wrote Citigroup.
Additionally, ISTAT will release its final estimates for the Italian consumer price index for June. No revisions to the preliminary estimates are expected.
On Tuesday, the Bank of France will report on its business sentiment indicator for June. Economists are expecting the indicator to dip further to 96 after slipping to 97 in May.
In terms of speakers, Central Bank of Ireland Governor John Hurley is expected to speak in front of the Parliamentary Committee in Dublin.
All times in EDT
2:30 FR Bank of France Business Sentiment June Exp: 96 Prior: 97
2:45 FR Current Account (EURO) May Prior: -€3.0B
4:00 GB Bank of England's Sentance Speaks at Pensions Conference
4:00 DE Germany's Glos Meets Russia's Medvedev, Putin in Moscow
4:00 IT CPI (NIC including tobacco) (M/M) June Final Exp: +0.4% Prior: +0.4%
4:00 IT CPI (NIC including tobacco) (Y/Y) June Final Exp: 3.8% Prior: 3.8%
4:00 IT CPI - EU Harmonized (M/M) June Final Exp: +0.5% Prior: +0.5%
4:00 IT CPI - EU Harmonized (Y/Y) June Final Exp: +4.0% Prior: +4.0%
4:30 GB CPI (M/M) June Exp: +0.4% Prior: +0.6%
4:30 GB CPI (Y/Y) June Exp: +3.6% Prior: +3.3%
4:30 GB Core CPI YOY June Exp: +1.5% Prior: +1.5%
4:30 GB Retail Price Index June Exp: 216.0 Prior: 215.1
4:30 GB RPI (M/M) June Exp: 0.5% Prior: 0.5%
4:30 GB RPI (Y/Y) June Exp: 4.3% Prior: 4.3%
4:30 GB RPI Ex Mortgage Interest Payments (Y/Y) June Exp: 4.4% Prior: 4.4%
5:00 DE ZEW Survey (Economic Sentiment) July Exp: -55.0 Prior: -52.4
5:00 DE ZEW Survey (Current Situation) July Exp: 32.9 Prior: 37.6
5:00 EU ZEW Survey (Economic Sentiment) July Exp: -56.0 Prior: -52.7
6:00 EU ECB Hurley speaks to Parliamentary Committee in Dublin
9:00 EU France's Lagarde speaks to EU Parliament in Brussels
July-15 IT Bank of Italy Releases Quarterly Economic Bulletin 15-July
July-15 PT ECB's Constancio Presents Summer Economic Bulletin in July
