US Durable Goods Orders Report in the Spotlight
The US Durable Goods Orders, the Canadian and the Australian inflation reports will be among the most important data releases for today and tomorrow. Market analysts suggest a downbeat print in Durable Goods Orders could influence the US dollar’s value against its competitors.
An International Monetary Fund (IMF) report published earlier in the morning said that rising corporate profits account for almost half the increase in Europe’s inflation over the past two years. In the UK, Bloomberg Economics analysts suggest that rate hikes by the Bank of England (BoE) could push the economy into recession by the end of 2023.
According to a CNBC report, Chinese Premier Li Qiang said that China is still on track to reach its annual growth target of around 5%, adding that growth in the second quarter was expected to be faster than it was in the first.
US Durable Goods Orders likely to have slumped in May
On Tuesday, the US Census Bureau will release the May Durable Goods Orders report. Market analysts expect orders to have slumped by 1%, in contrast to April’s 1.1% surge. Durable goods orders report measures the increase or decrease of orders of goods that can last for more than three years.
Durable goods orders figures are considered important indicators of an economy’s health. It should be noted that the ISM Manufacturing Index has contracted for seven months in a row. Economists suggest that economic uncertainty and high inflation figures have contributed to a decline in demand for capital expenditure.
Canada CPI inflation to drop in May?
The BoC and Statistics Canada will publish inflation data on Tuesday. Economists forecast the Statistics Canada headline inflation figure to come in at 3.4% in May, on an annualised basis, down from 4.4% in April. Both reports coming from the BoC and the Canadian statistics service regarding core CPI readings on a month-to-month basis are expected to show a 0.5% surge.
The BoC decided to resume its monetary tightening policy last month by raising interest rates even though it was one of the first central banks that had vowed to reevaluate its strategy in spring. Bank of Montreal (BMO) analysts said that an inflation drop would be good news but wouldn’t quash the BoC’s worries. Therefore, they suggest that one more rate hike could be on the way. The BoC’s board will announce its interest rate decision on July 12th.
Australian Monthly CPI report
On Wednesday morning, the Australian Bureau of Statistics (ABS) will release its monthly CPI inflation report for May. Economists forecast headline inflation to come in at 0.2% on a month-to-month basis which would mean annual headline inflation fell to 6.3% from 6.8%.
Commenting on Australian inflation and the Reserve Bank of Australia (RBA) policy, ING analysts wrote in a report that “following the guidance from the Reserve Bank of Australia's (RBA) minutes from June, where the decision to hike was a very finely balanced one, this improvement in inflation suggests that July could well provide the bank with a chance to pause.”
Ifo: German business morale falls for 2nd consecutive month
The Ifo institute’s business climate index dropped to 88.5 in June, down from 91.5 in May, recording a larger drop than anticipated. A Reuters poll of analysts had predicted a fall to 90.7. Commenting on the survey, the Ifo’s head said that “sentiment in the German economy has clouded over noticeably,” while other analysts working for the German institute noted that high interest rates are dampening demand and the industry’s export expectations are significantly down.
The latest monthly report by Bundesbank forecasts that recession will reach its end soon as the GDP will “rise slightly” in the second quarter, after contracting in October-December and January-March. The German central bank predicts Germany’s economy will shrink by 0.3%, followed by a small recovery of 1.2% in 2024 and by 1.3% in 2025.
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