The coming week will finish providing us with insights on inflation in key economies. Following the latest reading of price growth from the United States, it appears to be falling faster than previously expected. This seems to have reversed some trends, leading to a weaker US dollar and rising bond prices. We will also find out in the coming week whether China will move from its post-pandemic slowdown to a new wave of growth.
Monday, 17.07, 2:00 GMT, China's gross domestic product (GDP) annualised (Q2 this year).
Gross domestic product (GDP) indicates the total value of goods and services produced in a country over a specified period of time. GDP is an important indicator, giving an overall picture of how a country's economy is performing. Higher than expected GDP growth can be a positive sign for the currency. GDP growth lower than expectations, on the other hand, can be a negative sign for the currency.
China is one of the fastest growing economies in the world, regardless of the method of measurement adopted. However, the long-lasting pandemic has contributed to a slowdown in economic growth, reducing the average GDP growth rate by 2 percentage points from around 6-7 to 4-5%. The latest figures show a growth rate of 4.5%. Analysts, however, agree on the recovery of the economy, predicting robust growth in the second quarter of this year to as much as 7.3%. This could usher in a new phase of growth, avoiding the previously expected slowdown.
Source: Tradingeconomics.com
A higher-than-expected reading may be bullish for the CNY, while a lower-than-expected reading may be bearish for the CNY.
Impact: CNY
Wednesday, 19.07, 6:00 GMT, CPI inflation for the UK (June)
The latest US inflation data came as a positive surprise to analysts, with readings below expectations. This seems to have sparked optimism about the future in other economies. The UK is one of the developed countries particularly affected by high inflation. The last reading indicated that inflation had stalled at 8.7%. Analysts are now predicting a fall in inflation to 8.3%, but this is still very high in a historical context.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for GBP, while a lower-than-expected reading could be bearish for GBP.
Impact: GBP
Wednesday, 19.07, 9:00 GMT, Eurozone CPI inflation (June)
On the same day after the UK inflation data, we will learn about inflation from the Eurozone, where the pace of price dynamics has already almost halved from its peaks. The last reading showed inflation at 6.1%. In the reading for June, analysts expect a confirmation of the downward trend to 5.5%.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the EUR, while a below-expected reading could be bearish for the EUR.
Impact: EUR
Wednesday, 19.07, 12:30 GMT, number of new building permit applications in the United States (June)
The number of building permits issued is an important economic indicator reflecting the outlook for the construction sector. A decline in the number of permits could mean a reduction in future construction projects and an increase in unemployment in the industry. A higher number of permits indicates economic development, greater investment and increased demand for construction services. This in turn contributes to an increase in employment, income and consumption, encouraging overall economic development. Monitoring this indicator helps to assess the outlook for the construction sector.
The number of building permits in the United States fell by 12.4% year-on-year, meaning that housing activity has been subdued due to the rapid rise in interest rates and persistently high inflation. Nevertheless, readings reached their highest level since October 2022. Analysts now expect the number of new building permits to hold at 1.495 million.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the USD, while a lower-than-expected reading could be bearish for the USD.
Impact: USD
Stocks to watch
Bank of America (BAC) announces financial results for Q2 ending June 2023. Forecast EPS: 0.8403 Positive earnings surprise in 10 of last 10 reports. Deadline: Tuesday, 18 July, before the market opens.
Morgan Stanley (MS) announces financial results for the second quarter ending June 2023. Forecast EPS: 1.37. Positive earnings surprise in 8 of last 10 reports. Deadline: Tuesday, 18 July, before the market opens.
Tesla (TSLA) announces financial results for Q2 ending June 2023. Forecast EPS: 0.7917. positive earnings surprise in 8 of last 10 reports. Deadline: Wednesday, 19 July.
Netflix (NFLX) announces financial results for the second quarter ending June 2023. Forecast EPS: 2.86. Positive earnings surprise in 7 of last 10 reports. Deadline: Wednesday, 19 July.
IBM (IBM) announces financial results for Q2 ending June 2023. Forecast EPS: 2.00. Positive earnings surprise in 10 of last 10 reports. Deadline: Wednesday, 19 July.
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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