• MON: US-China meeting; German Ifo Survey (Jul).
• TUE: MNB Policy Decision; South Korean GDP (Q2); US Durable Goods (Jun) and Richmond Fed (Jul).
• WED: FOMC Policy Decision, BoJ SOO (Jul), CBRT Minutes (Jul); Australian CPI (Q2); German GfK Consumer Sentiment (Aug); Canadian CPI (Jun).
• THU: German Unemployment Rate (Jul); EZ Sentiment Survey (Jul); German Prelim CPI (Jul); US GDP and PCE Advanced (Q2).
• FRI: Japanese Employment Data (Jun); EZ Flash CPI, GDP and Unemployment Rate (Q2); US PCE Price Index (Jun).

NOTE: Previews are listed in day-order

US-CHINA MEETING (SUN/MON): US Deputy Secretary of State Sherman is set to visit China for talks on the 25th and 26th July. Sherman will meet Chinese officials including State Council and Foreign Minister Wang Yi. The confab will also follow Sherman’s visits to Japan and South Korea. Sources via SCMP earlier last week suggested that Washington will be sending Deputy Secretary of State Sherman to China to meet with Vice Foreign Minister Xie Feng. This was to serve as a precursor for a meeting between Secretary of State Blinken and China's Foreign Minister Wang Yi, the source added. The meeting is to reportedly "touch base and for both sides to get a sense of where the relationship is going" and also comes as tensions remain heightened on several fronts, with recent sources suggesting that the meeting will discuss US’ serious concerns regarding China’s actions, alongside areas where interests align. The US early last week ramped up its rhetoric on the Xinjiang issue as it warned American companies with interests in the area risks breaking US law. Furthermore, the military landscape remains heated. Earlier this month, China said it "drove away" a US warship that trespassed Chinese territory in the South China Sea. Further, China warned the US of "serious consequences" after the US Air Force delivered "diplomatic mail" to the de facto US embassy in Taipei, with Beijing claiming that the US trespassed its airspace. The Phase One trade deal will likely not be revisited in a meaningful way next week as the trade representatives from both sides are not gathering, as far as the reports go. Thus, the meeting will be observed with a geopolitical lens, and the tone between the nations will be eyed. SCMP also suggested that this meeting could eventually pave the way for a summit between the two presidents - some have raised the possibility of a Biden-Xi meeting at the October G20 summit in Rome. A joint press conference or statement will be viewed as constructive. Reports on Wednesday noted that at the meeting, China is to urge the US not to harm the country's interest whilst Sherman intends to show what responsible and healthy competition can look like, and wants to ensure there are 'guardrails' and competition does not go into conflict. Lastly, the US State Department said the US and China have an alignment of interest on North Korea but Defense Secretary Austin vowed to counter 'unfounded' China claims in the South China Sea.

CANADA CPI (WED): Canadian bank RBC looks for another strong print for the headline CPI metric, forecasting a rise of +0.6% M/M (after +0.5% M/M in May), buoyed by gasoline prices and home replacement costs. However, given the strong gains seen in the June 2020 report, RBC suggests that the headline Y/Y rate may pare back to 3.4% from 3.6% in May 2021. The bank also notes that the June release will be the first with new CPI basket weights, which cover 2020 spending patterns, and will see travel-related prices and clothing/footwear categories -- areas most impacted by the pandemic -- to have reduced weightings, while categories like furniture, real estate fees, and alcohol will see increased weights; "Overall, the changed weights should bias future CPI readings lower relative to the previous weights, though the impact in this release should be minimal," RBC writes.

FOMC POLICY DECISION (WED): The main focus will be the central bank's discussions on how to scale-back the rate of its asset purchases, currently running at a clip of USD 120bln/month (USD 80bln Treasuries, USD 40bln MBS). Reports indicate officials will receive formal briefings from staff on the strategies for reducing bond purchases, and Powell will likely be quizzed on these in his Q&A. Whatever the strategy, the eventual approach that the Fed adopts will likely depend on the progress of the economy in reaching the Fed's goals; some officials have cautioned against a tapering process which is fixed on 'autopilot', indicating a desire for flexibility. Analysts see the Fed taper being announced somewhere between September 2021 through June 2022, and many expect it will be reduced by around USD 10bln per month, implying that the taper process could last for around one year or so. And in terms of future sequencing of policy, many assume the Fed will allow asset purchases to be tapered fully before considering any rate rise, which puts a possible H2 2022 rate hike in play (all dependent on the progress of the economy, of course). Another debate on asset purchases is whether the Fed will taper MBS purchases quicker than Treasury purchases, which some have called for given the heat in the housing market (note: influential Fed officials have argued that both MBS and Treasury purchases have had similar impacts on the economy). Elsewhere, Powell will again face questions on whether he will serve a second term (his current term expires next February), to which the Fed chair will graciously deflect the line of questioning. This week, WSJ suggested that he is viewed by some inside and many outside the administration as the front-runner for the job, although the progressive and female Governor Brainard is also in contention. An FT editorial this week has called for Powell to be handed a second term, arguing that 'if it ain't broke, then don't fix it'.

BOJ SUMMARY OF OPINIONS (WED): The BoJ will release the Summary of Opinions from its July 15th-16th meeting next Wednesday, which lacked any major fireworks as the central bank kept policy settings unchanged as expected with rates kept at -0.10% and 10yr JGB yield target maintained at 0.0%, although it adjusted its Outlook Report forecasts and confirmed to offer funds at zero interest for the scheme to combat climate change but will not offer an interest reward to banks that tap into the scheme. The BoJ’s statement reiterated that Japan's economy remains in a severe state but is picking up as a trend and is likely to recover although activity remains low compared to pre-pandemic levels, while it will not hesitate to take additional easing steps if necessary. Furthermore, the BoJ reduced its Real GDP growth forecast for the current fiscal year to 3.8% from 4.0% but upgraded its fiscal 2022 forecast to 2.7% from 2.4%, and raised Core CPI forecasts for fiscal 2021 and fiscal 2022 to 0.6% from 0.1% and to 0.9% from 0.8%, respectively. The adjustments in the outlook forecasts were not surprising as several press reports had anticipated the central bank to reduce GDP growth forecasts this year due to the recent state of emergencies in key Japanese prefectures including Tokyo, and which was offset by a hike in next fiscal year's growth projection, while the increase in Core CPI estimates had also been flagged by sources and was due to the recent rise in energy prices. Nonetheless, participants will still scrutinise the upcoming release for further clues on the central bank’s thinking, although like the actual policy meeting itself, the Summary of Opinions aren’t anticipated to be a major driver for price action.

AUSTRALIA CPI (WED): Q2 CPI is seen ticking higher to 0.7% from 0.6% QQ, whilst the YY is seen surging to 3.8% from 1.1% amid base effects. The trimmed and weighted mean metrics are also expected to show upticks. Trimmed QQ is forecast at 0.5% from 0.3%, YY at 1.6% from 1.1%, whilst the weighted QQ and YY are expected at 0.5% (from 0.4%) and 1.7% (from 1.3%). A rise in fresh fruit & vegetable prices, alongside crude and the softer AUD, are seen providing a temporary boost to CPI, as per analysts at Westpac. However, desks note that the government’s HomeBuilder grants subsidy scheme continues to provide downward pressure on CPI, whilst falling prices in international and domestic travel will also provide headwinds. “Inflation remains well contained but the key going forward will be how dwelling prices respond to the loss of support from the ending of the HomeBuilder grants,” Westpac says, adding that “Core inflation is yet to see any significant momentum lifting it into the RBA’s target band.”

US ADVANCE Q2 GDP (THU): Analysts expect growth of 8.2% annualised in Q2, picking up pace from the +6.4% seen in Q1. At pixel time, the Atlanta Fed's GDPnow tracker for Q2 is signalling +7.6% annualised, while the NY Fed's staff nowcast is tracking Q2 growth at +3.2% (the main difference between the two measures is that the GDPnow adapts statistical nowcasting techniques to mimic the methods used by the US BEA to estimate real GDP growth). There has been a suggestion among some analysts that US growth has peaked, and the Q2 report should help to shed some light on this view. Indeed, some desks have been citing a slower equity impulse as consistent with the 'peak everything' theory, and if it appears that there is further growth in the US' engine, it may support reflationist trades, some have argued. Separately, others note that even if growth has peaked, it will have peaked from elevated levels, and the economy is still expected to grow ahead, just at a slower rate. Elsewhere, the media-framing of the report post-release is likely to focus on the US surpassing its pre-pandemic peak. It is also worth noting that there are still some June data points to be released that could see analysts tweak forecasts going into the report (durable goods, inventory data, as well as trade figures).

EZ FLASH CPI/GDP (FRI): The first look at Q2 GDP is expected to reveal Q/Q growth of 1.5% vs. Q1's 0.3% contraction. On a Y/Y basis, GDP is pencilled in at +13.2% vs. the -1.3% seen in Q1. The second quarter was one whereby regional governments began to unwind the lockdown restrictions seen in Q1. We know from timelier survey-based data that this prompted a rebound in activity, with the Q2 average for EZ services PMI at 54.7 vs. 46.9 observed in the prior quarter. As such, a report which chimes with this messaging should come as little surprise to the market. In fact, the market consensus of 1.5% is near-enough inline with the ECB's projection of 1.4%. On the inflation front, headline Y/Y CPI is forecast to tick higher to 2.0% from 1.9% with the core (ex-food and energy) print set to hold steady at 0.9%. An outturn of 2.0% (as was the case in May) would technically mark a return to the ECB's inflation target. However, as we are well aware by now, such an outcome and a further increase in the coming months will continued to be classified as "transitory" by policymakers. Over the medium-term policymakers take a more subdued view on inflation with just a 1.4% rate projected for 2023. As such, the release will likely pass with little in the way of fanfare with market participants likely instead to focus on the fallout from the Bank's strategic review and subsequent policy meeting.

US PCE, PERSONAL INCOME, SPENDING (FRI): Core PCE prices are seen rising +0.7% M/M in June (prev. 0.5%), which many think will push the Y/Y rate to a new post-pandemic high above the May 3.4% Y/Y reading, which would not be as extreme as the readings seen in the CPI report, but still running above the Fed's comfort zone. Credit Suisse says most of the strength will be driven by a few components that are sensitive to supply chain bottlenecks and easing pandemic restrictions, but notes that there have been some recent signs of a pickup in stickier components as well. Ahead, the bank sees annualised inflation measures moderating into the summer, but still sees core PCE as likely to remain uncomfortably above target at least through the end of the year. Elsewhere, the consensus looks for Personal Income to rise by +0.2% M/M in June (prev. -2.0%), and consumption to rise +0.5% M/M (prev. unch). Analysts expect that personal income will continue to be subdued as the fizz from fiscal stimulus fades. CS expects "overall disposable personal income to continue to decline, but the level is likely to remain above trend through the end of the year," adding that "discretionary services demand is recovering rapidly as pandemic restrictions ease, but this is being offset by a slowdown in real retail sales." Ahead, the bank looks for overall consumer spending growth to remain strong as the services sector continues to normalise.

CANADA GDP (FRI): StatsCan nowcast estimate last month pencilled in a -0.3% M/M reading for the headline in May's GDP report, matching the rate of the April decline. Many desks have been happy to ignore the GDP data in the near-term given that the recent weakness has been a function of pandemic restrictions, and accordingly, analysts seem to be paying more attention to the nowcast for the month ahead. Canadian bank RBC expects that nowcast to allude to a +1.0% reading for the July headline given a decent impulse from the manufacturing sector, as well as encouraging data out of the consumer sector, where RBC's own indicator expects a sharp rebound in retail sales; this would support its view for 3.5% annualised growth in Q2, with a decent acceleration into Q3 (RBC sees +7% annualised, the BoC forecasts in July had pencilled in +7.3% in Q3).