We have a very busy week ahead of us with four central banks deciding on monetary policy: the FOMC, the BoJ, the Norges Bank and the BoE. Following hints from several Fed policymakers that they could cut rates in order to avert a steep economic downturn, investors will be eager to see whether the Committee will officially signal that rate reductions are indeed on the cards. The BoJ and the BoE are expected to keep their respective policies unchanged, while the Norges Bank could hike. We also get the minutes from the latest RBA policy meeting and Eurozone’s preliminary PMIs for June.
Monday appears to be a relatively light day in terms of events and economic releases. We only get wage data for Q1 from the Eurozone, and the New York Empire State manufacturing index from the US. No forecast is available with regards to the Euro area wages, but the bloc’s Labor Cost Index is expected to have accelerated to +2.6% yoy from +2.3% in Q4, 2018. The US Empire State index is anticipated to have declined to 11.00 from 17.80.
On Tuesday, during the Asian morning, we get the minutes of the latest RBA monetary policy gathering. At that meeting, policymakers decided to cut rates by 25bps and noted that they will continue monitoring developments in the labor market and adjust policy accordingly. There were no strong hints with regards to more rate reductions in the statement, but policymakers did not close the door either.
Thus, we believe that market participants will dig into the minutes to find out how willing officials were to proceed with more cuts in the months to come. After the meeting, GDP data showed that the...
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