Economic calendar review: Focus shifts to BOC, BOJ, and ECB rate decisions

Economic calendar review: Focus shifts to BOC, BOJ, and ECB rate decisions
Written by:
Crispus Nyaga
12th July, 16:47
  • The economic calendar will be busy this week with interest rate decisions from the ECB, BOJ, and BOC.
  • Analysts expect the three central banks to leave interest rate unchanged.
  • Other data to watch will be the Chinese GDP numbers, US retail sales, and UK GDP and CPI numbers.
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The US dollar declined against its major peers as traders continued to worry about the rising number of coronavirus cases in the US. These cases led many investors to rule out a V-shaped recovery in the country. They also believe that the Fed could be forced to implement more monetary policy strategies, including yield curve control and negative interest rates. In this report, let us look at the key events to watch in the economic calendar this week.

Economic calendar
Main items in the economic calendar

Bank of Japan (BOJ) interest rate decision

The Bank of Japan will start its two-day meeting on Tuesday and deliver its decision on Wednesday. The decision will come at a time when the Japanese economy is going through its worst crisis in decades. The economy declined by 3.4% in the first quarter after falling by 7.3% in the fourth quarter.

In a recent report, the OECD predicted that the economy will decline by more than 6% this year. Still, analysts expect the bank to leave interest rate unchanged at -0.10% and continue with its open-ended quantitative easing program.

Other important data to watch in the economic calendar from Japan will be the tertiary industry activity index, industrial production, capacity utilisation, and the national CPI.

Bank of Canada (BOC) interest rate decision

The Bank of Canada will start its policy meeting on Tuesday this week and deliver its decision on Wednesday. As with the BOJ, analysts polled by Reuters expect the bank to leave rates unchanged at 0.25%. In its last decision, the bank also decided to taper its $200 billion quantitative easing program.

Fortunately for the BOC, the decision comes at a time when the Canadian economy is doing well. This is evidenced by the recent export and import dataand employment numbers. Also, the number of coronavirus cases in the country has started to fall while the price of crude oil has started to rise.

European Central Bank (ECB) decision

The ECB will be the third main central bank to deliver its decision this week. The Christine Lagarde-led bank, will start its policy meeting on Wednesday, and deliver its decision on Thursday. In the June meeting, the bank left interest rates unchanged and announced a €600 billion addition to its previous €750 billion program. Therefore, analysts expect the bank to leave rates unchanged and sound cautious about the recovery. Analysts at ING said:

“The ECB has always emphasized the flexibility of the programme and the fact the eurozone bond yields are back at pre-crisis levels as well as some slowing of the pace of the ECB purchases has given rise to speculation in markets about a possible earlier end.”

Other things to watch in the economic calendar will be inflation data from the Eurozone and German sentiment data.

Chinese growth data

China is probably the most important economy in the world. It is the second biggest after the United States, the biggest manufacturer and supplier. Therefore, most traders focus on the data from the country to gauge the performance of the global economy. On Thursday, the country’s statistics office will release the unemployment rate, first reading of Q2 GDP, industrial production, and fixed asset investment. Analysts polled by Reuters expect that the GDP rose by 2.1% in the quarter after contracting by 6.8% in the previous quarter. On Tuesday, the office will release the June export and import data, which will send a signal on the health of the economy.

UK economic data

The British pound rose against the US dollar last week as traders remained optimistic about recovery of the US economy. This week, focus will shift to a vast number of economic numbers from the country. Among the key data to watch will be trade numbers, construction output, industrial production, manufacturing production, and employment change. These numbers will be released on Tuesday.

On Wednesday, the ONS will release the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index (RPI). Other data to watch will be car registration, unemployment rate, and retail sales.

Other events in the economic calendar

There will be other numbers in the economic calendar. From the United States, we will receive housing starts, building permits, consumer price index (CPI), retail sales, and jobless claims. Meanwhile, in Australia, will get the employment numbers, new home sales, and business confidence data. These numbers will come at a time when the country has released upbeat economic numbers. In Turkey, we will receive industrial production, retail sales and budget balance.

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