The main event on this week’s agenda is likely to be Fed Chair Powell’s testimony before Congress, as following Friday’s strong NFPs, investors are scratching their heads to figure out by how much is the Fed willing to cut rates. With regards to central bank decisions, we have a BoC meeting. We believe that the BoC will hold rates steady and reiterate its data dependency, staying among the few major Banks that have not turned their eyes to the cut button yet. The minutes from the latest FOMC and ECB policy gatherings are also due to be released.
Monday appears to be a relatively light day, with no major events on indicators scheduled on the agenda.
On Tuesday, during the Asian morning, Australia’s NAB business survey for June is coming out. Although this is usually not a market mover, given the RBA’s emphasis on the labor market, we will closely monitor the labor costs index, which rose to +1.0% qoq in May from +0.6% in April. At its latest meeting, the RBA said that it will continue to monitor developments in the labor market closely and adjust policy “if needed” to support sustainable growth and the achievement of the inflation target. In June, the guidance was the same but without the “if needed” part. So, in our view, its addition means that, although the door for further action is not closed, the RBA is not in a rush to cut again when it meets next. Indeed, according to the ASX 30-day interbank cash rate futures implied yield curve, another quarter-point cut is almost fully priced in for December.
Later in the day, we get the US JOLTs Job openings for May, where expectations are for a slight increase, and the NFIB Small Business Optimism index for June, for which no forecast is currently available. From Canada, housing starts for June and building permits for May are coming out.
On Wednesday, the main event is likely to be the semiannual testimony of Fed Chair Jerome Powell before the House Financial Services Committee of the US Congress. On Thursday, he will...