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Economic calendar: Minutes and inflation

Summary:

  • ECB and Riksbank to publish minutes from the latest meetings

  • Swedish inflation expected to move further above Riksbank’s target

  • Consensus suggest the US inflation reading may justify a desire of 4 hikes this year

Thursday’s economic calendar looks especially pleasing for monetary policy enthusiasts. In the morning attention will turn to Sweden where CPI inflation reading is scheduled for release. The Riksbank minutes will be published simultaneously. In the early afternoon investors will be focused on ECB’s minutes as it may offer some more hints on timing of the first rate hike. Last but not least, inflation figures from the US will be published one hour after the ECB’s minutes.

8:30 am BST - Sweden, Riksbank Minutes and CPI Inflation for June. During its latest monetary council meeting Riksbank decided to keep interest rates unchanged. However, investors were offered some hawkish comments. Namely, central bankers may actually rise interest rates during the final quarter of a year. Price growth has been decent as of late as the inflation hovers around the set target. Today’s inflation data should confirm this as market consensus points for a pick up from 1.9% YoY to 2.1% YoY. This data of course will not be recognized in Riksbank minutes but they may offer some other interesting remarks.

12:30 pm BST - ECB Minutes. While ECB signalled the end of QE programme during its latest meeting Mario Draghi also said that any rate hike ahead of summer 2019 is very unlikely. He might have a point as the core measure of European CPI inflation still hovers around 1% YoY. However, latest comments from various ECB members may suggest that the outlook on the timing of the first rate hike in years may not be uniform. The investors will analyze the account from the latest monetary policy meeting and try to assess whether we will actually have to wait a year until ECB decides to change the level of interest rates.

1:30 pm BST - US, CPI Inflation for June. While in Europe ECB is still hesitating to make a bold step and tighten its policy in the US Fed is already rising rates. Federal Reserve raised rates by another 25 bp during its June meeting and the dot-plot released along with the decision suggested that the central bankers’ consensus has moved to the total of 4 hikes this year. However, a strong inflation will be needed to keep up with this “promise”. Today’s reading is expected to show headline CPI inflation accelerating to 2.9% YoY (2.8% YoY previously) while the core measure should tick higher from 2.2% YoY to 2.3% YoY.

Central bank speakers scheduled for today:

  • 1:30 pm BST - Fed’s Kashkari

  • 5:15 pm BST - Fed’s Harker 

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 USDSEK broke above the support zone at 8.79 yesterday but failed to surpass the 61.8% retracement level of the major slump started in late-2016. Riksbank minutes and the Swedish inflation reading may offer some relief for the SEK. Source: xStation5

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