• MON: Riksbank Minutes (July), Eurogroup Meeting & Foreign Affairs Council
• TUE: US CPI (Jun); Chinese Trade Balance (Jun); IEA MOMR, EU Economic/Financial Affairs Council
• WED: BoC, RBNZ & CBRT Policy Decisions; UK Inflation (Jun); EZ Industrial Production (Jun); US PPI (Jun)
• THU: BoK Policy Decision, OPEC MOMR; Australian Labour Market Report (Jun); Chinese GDP (Q2); UK Claimant Count (Jun) and Unemployment Rate (May); US Philly Fed (Jul); New Zealand CPI (Q2)
• FRI: BoJ Policy Decision; EZ Final CPI (Jun); US Retail Sales (Jun) and University of Michigan Prelim (Jul)

NOTE: Previews are listed in day-order

US CPI (TUE): The Street looks for headline CPI to rise 0.4% M/M in June from May's +0.6% M/M rise; the core measure is seen rising by 0.4% M/M as well from a prior +0.7%. UBS says the headline will be driven higher by food and energy prices, after gasoline prices rose around 3% in June, and scanner data implies a solid, 0.25ppts rise in food at home prices. UBS' nowcasting model suggests some upside risks to its forecasts, however. On core prices, the bank expects another month of hefty rises, coming on the tail of two already hot months; the same factors that drove upside in core prices in April and May will likely do so again in June, the bank says. "Major increases in used car prices (though data from Manheimand JD Power suggest the CPI used car price surge will be slowing in the next couple of months); large rises in prices for household furniture, computers, and other goods driven by strong import prices and high commodity costs; and prices for lodging away from home rapidly moving back toward (and likely through) their pre-pandemic levels," UBS writes, adding that solid  price increases are also projected for new  autos, pushed up by semiconductors shortages and low inventories, and apparel, which still remains well below pre-pandemic price levels. Ahead, UBS sees Y/Y CPI rising to 5.1% from 5.0% in the June data, where it will peak: "While the dramatic surge in recent months has likely ceased, we expect headline CPI to remain around 5% through the last couple months of this year," it writes, and for the core Y/Y measure, it sees a rise to 4.2%; "Despite weakening in the monthly numbers after the summer, we project little decline in the core CPI 12-month change, and that it will stay at or above 4.0% until peaking at 4.4% next spring before base effects lead to a substantially slowing."

RBNZ POLICY ANNOUNCEMENT (WED): Attention will be on the central bank's forward guidance, given that no new forecasts will be published. Since its previous meeting in May, growth metrics have firmed more than the RBNZ's projections, while inflation has picked up too. Westpac says that the current guidance that the central bank will maintain current levels of accommodation for a 'considerable' amount of time will likely be tweaked; "the RBNZ is likely to start setting the scene for a normalisation of monetary policy, without committing to a particular timing," Westpac says, "we have brought forward our forecast for rate hikes, and now expect the first OCR increase in November 2021 (previously August 2022).

UK INFLATION (WED): Expectations are for the headline Y/Y CPI rate to rise to 2.2% from 2.1%. The prior month's jump from 1.5% to 2.1% was driven by increasing petrol prices, clothing and recreation. Oxford Economics notes that although some of the pick-up last month was likely attributable to noise, there is likely a link to the reopening of non-essential retailers and outdoor hospitality. Analysts are split on how much of this will continue into the June release, with the consensus looking for an uptick in CPI; Oxford Economics sees an unwinding of the May spike in June, and pencils in a print of 1.8%. Either way, from a policy perspective the upcoming release will likely have little bearing on the BoE, with the MPC of the view that any pick up in prices above 2% will likely be a transitory phenomenon before subsequently cooling and then returning to 2% over the medium term.

CBRT POLICY ANNOUNCEMENT (WED): The weekly repo rate is expected to be left unchanged at 19.00%, according to all 18 contributors polled by Reuters. As a reminder, in June, the CBRT left policy parameters unchanged and reiterated a commitment to keep rates above inflation to maintain a strong disinflationary effect. Since this gathering, the CBRT has hiked its RRR on FX deposits with the one-year rate upped to 21% from 19%; as part of ongoing steps by Officials in Turkey to increase TRY holdings.  Perhaps the most pertinent recent development has been the June CPI print of 17.53% YY vs prev. 16.59%, moving further above the CBRT’s current year-end forecast of 12.2%, from the April inflation report which will be updated on July 29th. On this, Governor Kavcioglu has remarked that the inflation path does not indicate a hike, but they will take such decisions if necessary – note, these remarks were made prior to the aforementioned CPI reading. While elevated, this level is still someway from the current weekly repo rate and would be in-line with the Bank’s reported expectation for a near-term inflation overshoot; one they believe is likely to be transitory in nature, as some reports indicate they are looking to maintain their end-year inflation view from the April report. Overall, Credit Suisse takes the view that there appears to be a high threshold to the CBRT hiking rates on account of possible future inflation increases.

BOC POLICY ANNOUNCEMENT (WED): Focus at July's Monetary Policy Report meeting will be on the steps the central bank takes in scaling-back its government bond purchases; Canadian bank RBC looks for a further reduction in the weekly pace to CAD 2bln from CAD 3bln announced in April. "GDP has evolved roughly in line with its April MPR projection, with the increased pace of vaccinations, low COVID cases, and (safer) reopenings likely to give the BoC added confidence in the expected growth acceleration over the summer," RBC says, and argues that with this rationale already factored into the BoC's and RBC's own forecast, it sees little reason for the Bank to adjust its forward guidance timeline; the BoC currently judges that considerable excess capacity remains, and that the recovery continues to require extraordinary monetary policy support; the Bank will hold rates at the lower bound until slack is absorbed so that the 2% inflation target is sustainably achieved, which it currently foresees happening sometime in the second half of 2022. There will naturally be much attention on the Bank's updated economic projections, particularly the CPI measures, after recent data has printed above the BoC's forecasts, and therefore, an upward revision may be on the cards, although the Bank will likely continue framing the upside in prices as transitory.

AUSTRALIAN LABOUR MARKET REPORT (THU): Australian jobs data for June is due out next Thursday in which expectations are for the headline Employment Change to show an increase of 30.0k vs prev. 115.2k and the Unemployment Rate to decline to 5.0% vs prev. 5.1%. The prior month’s jobs data for May was a blockbuster reading that was over five times greater than the forecast of 30.0k which had mostly been due to a 97.5k increase in Full-Time jobs and helped bring down the Unemployment Rate to a pandemic low, as well as supported the narrative of a stronger than anticipated rebound in the economy. Despite the stellar jobs data, it is not seen to have significant ramifications for central bank policy as the RBA have continuously reaffirmed guidance that suggests a rate hike is unlikely until 2024 at the earliest and although RBA Governor Lowe acknowledged the rebound in the labour market had been remarkable, he added that the positive surprise in jobs is not matched by equivalent surprises for wages and prices, while he also commented that wage growth will likely need to exceed 3% for inflation to reach the target range and that unemployment will need to be sustained at the low 4% level to be considered as full employment.

CHINESE GDP (THU): Chinese GDP data for Q2 is due next week where there are expectations for the world’s second-largest economy to expand by 7.7% according to a survey conducted by Nikkei which would still be firm growth although a slowdown from the double-digit expansion during Q1 in which China’s economy grew by 18.3% vs exp. 19.0%and printed its fastest pace of growth on record despite missing analyst expectations. The record increase in Q1 was spurred by stronger demand domestically and abroad with China benefitting from being the first one out of the virus and its status as the world’s factory, although the largest contributor would be base effects given that China had suffered a 6.8% contraction in Q1 2020. Nonetheless, these effects are expected to ease as China’s economy had already rebounded in Q2 last year in which it posted 3.2% growth, meaning a higher base to begin from. Furthermore, the Nikkei survey showed that forecasts were for Q/Q growth to increase to 1.4% from the 0.6% growth in the previous quarter and annual growth for 2021 is seen at 8.6%, which is greater than the government’s official growth target of above 6% for this year. The release will also coincide with Chinese Industrial Production for June exp. 7.9% (prev. 8.8%) and Retail Sales exp. 10.9% (12.4%)

UK JOBS (THU): The 3M/3M unemployment rate for May is expected to remain at 4.7%, with the report taking place within the context of a further reopening of the UK’s hospitality sector. As such, a strong month of employment change is set to be on the cards following the 113k additions seen in the last report. Ahead of the release, RBC highlights that the upcoming release will see the ONS impose changes to its Labour Force Survey to account for population adjustments. This is expected to lead to backward revisions to previous reports, however, these are set to be immaterial. On the employment front, the furlough scheme is set to draw to a close at the end of September. Although there have been no suggestions that it is set to be extended, market participants will be mindful of the mounting COVID cases in the UK which has seen approximately 600k people told to isolate by the NHS in the week to June 30th; a figure which is expected to increase in the coming weeks and therefore present some potential risks of labour shortages as the UK economy continues to reopen.

BOJ POLICY ANNOUNCEMENT (FRI): No major fireworks are anticipated as the central bank is expected to refrain from any policy adjustments with rates to be kept at -0.10% and QQE with yield curve control likely to be maintained to target the 10yr JGB yields at 0.0%, while the central bank will also release its latest Outlook Report which contains Board Members’ median forecasts for Real GDP and Core CPI. BoJ officials have continuously stuck to the script with Governor Kuroda reiterating the view that they won’t hesitate to take additional easing steps with an eye on the pandemic, but also suggested a lack of urgency with Japan's economy in a severe state but is picking up as a trend and is likely to recover as the pandemic impact subsides. The central bank also noted at its meeting last month that exports and output were increasing steadily although it downgraded the assessment of consumption which it stated was stagnating. Furthermore, the central bank announced to extend the pandemic relief programme by six months beyond the September deadline and will introduce a new scheme to back finance climate change loans which it expects to roll out by year-end and with the outline to be unveiled at the upcoming meeting. The data releases have been mixed which support a wait-and-see approach as the BoJ Tankan Survey disappointed in which most components missed forecasts but still showed the headline Large Manufacturing Index at its highest level since December 2018 and the Large Non-Manufacturers Index turned positive for the first time in more than a year. In addition, Industrial Production deteriorated with a wider than expected contraction at -5.9% vs. Exp. -2.4%, although Household Spending was more encouraging and Labour Cash Earnings posted its highest growth since June 2018, while National CPI Ex. Fresh Food showed its first increase since March 2020 at 0.1% vs. Exp. 0.1% (Prev. -0.1%) and despite remaining far from the 2% price target, is unlikely to spur action from the central bank as Kuroda has previously acknowledged core consumer inflation is hovering around zero which he suggested is likely to gradually accelerate. Attention will also be on the latest forecasts from the Outlook Report as sources previously noted the BoJ may lower the economic growth outlook for the current fiscal year amid the impact from state of emergency restrictions but is considering raising inflation estimates due to recent energy gains. In terms of the current forecasts, Real GDP is seen at 4.0% for fiscal 2021, 2.4% for fiscal 2022 and 1.3% for fiscal 2023, while the most recent estimates for Core CPI were at 0.1% for fiscal 2021, 0.8% for fiscal 2022 and 1.0% for fiscal 2023.

US RETAIL SALES (FRI): The consensus view currently expects US retail sales will have been unchanged in June vs the 1.3% decline in May; Auto sales will likely be the culprit of a lacklustre report, after the annual rate of vehicle sales fell to 15.4mln units SAAR in the month from 17.1mln. The ex-autos measure is seen rising +0.3% M/M from the prior -0.7%, and the control group is seen rising +0.2% M/M after -0.7% in May. There will be a degree of attention on retail sales in categories like restaurants and service for signs of how the reopening process is progressing. Analysts at Credit Suisse, citing high frequency data, say that restaurant spending will have continued to pick up in June, and it looks for a +3% monthly increase; "this would put overall restaurant sales at an impressive +4.7% above their pre-pandemic peak," the bank writes. CS sees services  spending  continuing to recover strongly as restrictions are lifted, "but goods consumption is likely to decline as the boost from the stimulus checks fades and consumption shifts toward in-person services." CS says that one potential upside surprise could come from non-store retailers, given Amazon's Prime Day was in June instead of the usual July event. "Overall," CS says, "we expect goods retail sales to continue moderating as services consumption recovers, and this should help ease some of the supply bottlenecks in the goods sector, especially as production picks up further."