We expect euro flash CPI for July to reach a new cycle low at 0.4% y/y (consensus 0.5% y/y) down from 0.5% y/y in June. Releases out of Germany and Spain yesterday showed a decline to 0.8% y/y (from 1.0% y/y) and -0.3% y/y (from 0.0% y/y), suggesting that we are also going to see lower overall euro inflation in July. Euro unemployment rate is expected to stay unchanged at 11.6% after falling last month. The unemployment rate has started to trend gradually lower after hitting a peak in Q3 last year at 12.0%.
US initial jobless claims will give more input about the state of the US labour market. Last week initial claims fell to 284k and the four-week moving average was 302k, the lowest level since 2007. It clearly shows the US job market is gaining momentum currently.
Chicago PMI for July is released, which will be the last main regional survey before ISM manufacturing on Friday. Consensus looks for a broadly flat reading at 63.0, clearly above the long-term average of 55.2.
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