FX Markets Turn To New Zealand, UK CPI And BoJ, ECB Meetings

After a bump in inflation in the first part of the year, New Zealand, like many other developed countries, is expected to have seen price pressures cool by mid-year. According to a Bloomberg News survey, we’re looking for the Q2’17 New Zealand CPI figure to come in at +1.9%, down from +2.0% in Q1 (y/y). The Reserve Bank of New Zealand is expecting choppy inflation figures, having said at their June policy meeting that “The increase in headline inflation in the March quarter was mainly due to higher tradables inflation, particularly petrol and food prices. These effects are temporary and may lead to some variability in headline inflation.” The headline reading might spark the New Zealand Dollar temporarily, but a sustained move is not eyed as the RBNZ continues to talk down its currency and temper expectations of significant policy changes in 2017.


07/18 Tuesday | 08:30 GMT | GBP Consumer Price Index (JUN)

The British Pound’s post-Brexit base effect weakness has almost worked its way out of the system, but its influence will linger at the upcoming inflation release. Consensus forecasts are calling for a +0.2% m/m increase (down from +0.3% in May) and a +2.9% increase (unchanged from May) (y/y). Likewise, core CPI is expected to hold at +2.6% (y/y). The Tuesday data release bears significant importance for the Sterling, as several Bank of England policymakers have expressed concerns of an “inflation overshoot.” In other words, if inflation continues to run higher above 3%, the BOE could be forced to raise rates. Currently, medium-term inflation expectations (5-year, 5-year inflation swaps) for the UK have been dropping, and were at their yearly low near 3.200% at the time this report was written.


07/20 Thursday | --:-- GMT | JPY Bank of Japan Rate Decision

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