The euro opens the week lower against the broadly higher dollar. Some comments from ECB officials over the weekend is weighing down the common currency. ECB executive board member Coeure said that the central bank will keep rates low for a long period of time to ensure monetary stability. Meanwhile, he also urged governments to "invest in Europe" and that's "the only way out". And, he said "one should expect a divergence of monetary conditions between the euro zone and the United States and Britain - where interest rates will at some point be lifted." Governing council member Noyer said that "even if the risk of deflation seems to have been avoided, we have ... price increases that are too low." And, Noyer was surprised on "the weak impact of the monetary easing" on prices.
IMF chief Lagarde hinted that there would be a cut in the global growth forecast. She noted that "the global economy is gathering speed, though the pace may be a bit less than we previously predicted because the growth potential is lower and investment remains lackluster". She urged to "reinforce supply capacity" to strengthen the recovery as effect of central bank's effort to sustain demand is limited. Nonetheless, she expected US to have "a significant rebound.
On the data front, Japan leading indicator dropped to 105.7 in May versus expectation of 105.9. Swiss unemployment rate was unchanged at 3.2% in June. German industrial production dropped -1.8% mom in May versus expectation of flat mom. Swiss foreign currency reserves and Eurozone Sentix investor confidence will be released in European session. Canada will release building permits and Ivey PMI in US session.
Looking ahead, a key event is the release of the FOMC minutes on Wednesday, together with several Fed presidents speaking. While Richmond Fed's Jeffrey Lacker and Minneapolis Fed's Narayana Kocherlakota will be speaking on Tuesday, Kansas City Fed's Esther George will talk on Thursday, followed by Atlanta Fed's Dennis Lockhart and Chicago Fed's Charles Evans on Friday. The BoE meeting will be due Thursday but there will likely be no change in policy. Further details about BoE's decision would not be out until release of the MPC minutes on July 23.
Here are some highlights of the week:
- Tuesday: Australia NAB business confidence; German trade balance; Swiss CPI, retail sales; UK manufacturing and industrial production;
- Wednesday: China CPI and PPI; Canada housing starts; FOMC minutes
- Thursday: Australia employment; China trade balance; BoE rate decision; US jobless claims
- Friday: Australian home loans; Canada employment