Week Ahead – Time for the Fed but first, it’s US inflation


The main event of the week is the FOMC decision, but before we get there, the May inflation report should show that inflation is cooling.  Pricing pressures should ease as gasoline prices tumble and as demand destruction starts to become apparent in the data.  The negative base effects start to help send the headline year-over-year inflation reading closer to 4.0%.  

The Fed is expected to deliver a hawkish skip, but if inflation ends up being too hot, the Fed could opt to deliver a rate hike.  This rate decision could be a close call and we should finally start to see some dissents.  The US economy has been resilient for most of the year but signs are emerging that it is starting to weaken.  If policymakers decide to hold off on another rate hike, there is a chance that this ‘skip’ could end up being a pause.  While Wall Street seems confident that the end of tightening is near, sticky inflation in the fall could disrupt how this market has aggressively priced in rate cuts by the end of the year.  


The ECB is expected to hike interest rates by another 25 basis points on Thursday is what is expected to be one of the final increases in the cycle. Markets are pricing one more in July but not fully, with the drop in inflation (including core) last month easing the pressure on the central bank to continue. I expect it will stress that there’s more to do and rate cuts are not even under consideration this year but they could indicate that a pause is now on the table.


The biggest pre-BoE data release is the CPI the day before the 22 June meeting but next week offers of a host of other indicators that will attract plenty of attention. The most notable is the jobs data on Tuesday, with traders looking for any indication of slack appearing in the labor market and wage growth subsiding. Without it, the MPC will persevere with tightening. BoE Governor Andrew Bailey will appear before the House of Lords Economic Affairs Committee shortly after the release which could offer some fresh perspective on the data. GDP is also released on Wednesday.


Revised GDP data is the only noteworthy release next week. The CBR left interest rates unchanged on Friday at 7.5% but warned rate hikes remain on the table due to increased inflationary risks. 

South Africa

Another quiet week with retail sales on Wednesday the only notable release. The country avoided recession in the first quarter, buoyed by resilient mining and manufacturing sectors. Rolling blackouts remain a massive constraint on the economy and company profits which will remain a huge headwind going forward.


Now that President Erdogan has secured another term, it would seem he’s decided that more conventional fiscal and monetary policy measures may be in order. He’s ignored markets for as long as he could, burning through reserves in the process and now the job of clearing up the mess has been handed to new CBRT Governor, Hafize Gaye Erkan. The lira has sunk more than 10% to fresh lows in recent days so Erdogan’s new team has quite the job on their hands clearing up his mess. Jobs data the highlight of the economic calendar next week.


Very little on the calendar next week, with PPI the only notable highlight.


A key week ahead with a string of important economic data releases as well as a decision on the PBoC interest rate.

First up on Monday, we will have the release of several credit conditions data for May; new yuan loans, outstanding loan growth, and M2 money supply. Consensus estimates expect a contraction in credit growth where outstanding loan growth to dip to 11.6% year-on-year from 11.8% recorded in April in line with a reduction in M2 money supply to 12.1% year-on-year from 12.4% in April.

On Thursday, another set of key economic data to digest; retail sales, industrial production, and house price index for May. Industrial production is expected to slow down to 4.1% year-on-year from 5.6% in April, retail sales are also expected to grow at a slow pace of 13.9% year-on-year from 18.4% in April (its strongest pace since March 2021), and average new housing prices in China’s 70 major cities are being forecasted to increase slighted to 0.5% year-on-year from -0.2% in April.

Also on Thursday, the PBoC will announce its decision on its 1-year medium-term lending facility (MLF), the interest rate on loans that it lends to major financial institutions. It has been unchanged at 2.75% since its last cut on August 2022. Expectations have increased for a rate cut this time around due to a string of weak economic data and the recent deposit rate cut from China’s major state-owned banks by 15 basis points and 5 basis points on three-year and five-year term deposits, as per advice by PBoC.


A busy week ahead. On Monday, industrial production for April is expected to improve to 1.8% year-on-year from 1.1% printed in March, its lowest growth in industry activity since October 2022. Annual inflation growth for May is expected to slow for a second consecutive month to 4.42% year-on-year from 4.7% in April, its lowest since November 2021.

On Wednesday, we will have another set of inflation data; the wholesale prices, food Index and fuel for May. Consensus estimates for wholesale prices are pegged at -2.35% year-on-year, a deeper contraction from -0.92% in April. If it comes out as expected, it will be a second consecutive month of deflation for wholesale prices.

On Thursday, balance trade data for May is forecasted to show a wider deficit of US$17.4 billion from US$15.24 billion reported in April.

Lastly, June data on foreign exchange reserves and bank loan growth will be released on Friday.


Two key data to take note of. Firstly, Westpac’s consumer confidence Index on Tuesday where an improvement is forecasted to come in at 3.2% from a significant decline of -7.9% recorded in May.

On Thursday, the focus will be on the jobs market; employment change for May is expected to show an improvement with a gain of 20,000 jobs added after a surprise decline of 4,300 in April. The unemployment rate is expected to hold steady at 3.7%.

New Zealand

On Wednesday, Q1 current account data and food inflation for May will be released. Food prices is being forecasted to increase slightly to 12.9% year-on-year from 12.5% in April. If it turns out as expected, it will be the fourth consecutive month of growth acceleration in food prices.

On Thursday, first-quarter growth is expected to be 2.6% year-on-year, an improvement from the fourth quarter print of 2.2%. 


The balance of trade data for May will be released on Thursday where a wider deficit of JPY1331.9 billion is expected from -JPY432.4 billion recorded in April. A contraction of 0.8% year-on-year in export growth is expected, that’s a significant swing from a growth of 2.6% recorded in April, its softest pace since a fall in February 2021.

On Friday, BoJ will announce the outcome of its monetary policy meeting. Given the recent mixed guidance from Governor Ueda on the future path of inflationary growth in Japan, the consensus is no change in its ultra-loose policy.  


One key data release to focus on is the balance of trade for May which will be released on Friday. A reduction in its surplus to S$4.2 billion is being forecasted versus a surplus of S$4.71 billion recorded in April.

Economic Calendar

Monday, June 12

Economic Data/Events

India CPI, industrial production

Japan PPI

Turkey current account

Denmark inflation

Gas transits to resume for Hungary as maintenance expected to be completed for TurkStream pipeline

BOE’s Mann speaks in a webinar hosted by Signum  

Asia New Vision Forum expected to host more than 300 business leaders, policymakers, industry practitioners, and opinion leaders  

NATO Secretary General Stoltenberg visits Washington to meet President Biden

Tuesday, June 13

Economic Data/Events

US May CPI M/M: 0.2%e v 0.4% prior; Y/Y: 4.1%e v 4.9% prior; CPI ex-food and energy M/M: 0.4%e v 0.4% prior; Y/Y: 5.3%e v 5.5% prior

Fed begins two-day policy meeting

Australia consumer confidence

Germany CPI, ZEW survey expectations

Mexico international reserves

Spain CPI

UK jobless claims, unemployment

BOE Gov Bailey testifies to the House of Lords economic affairs committee.

Wednesday, June 14

Economic Data/Events

US FOMC rate decision: Expected to keep rates steady, along with updated economic forecasts and Fed Chair Powell’s press conference  


Eurozone industrial production

India wholesale prices

New Zealand food prices

South Africa retail sales

Sweden CPI

UK monthly GDP, industrial production, trade

Monthly IEA oil market report

Swedish landlord SBBl holds an extraordinary general meeting to approve emergency cash-savings measures

Thursday, June 15

Economic Data/Events

PBOC meeting to decide on one-year policy loan rate; 1-year Medium-term lending facilities volume could rise from 125B to 225B

US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production

Australia unemployment

Canada housing starts, existing home sales

China property prices, retail sales, industrial production

Eurozone ECB rate decision: Expected to raise Main Refinancing Rate by 25bps to 4.00%, President Lagarde holds a press conference

France CPI

India trade

Japan machinery orders, tertiary index, trade

New Zealand GDP

Poland CPI

Russia GDP

Spain trade

NATO defense ministers meet in Brussels

Fed’s Bullard to speak at Norges Bank, the International Monetary Fund, and the IMF Economic Review hold a joint conference on “The Future of Macroeconomic Policy” in Oslo

BOE’s Cunliffe speaks at Politico Global Tech Summit — London Tech Week — on ‘Central banks and the future of payments’

Friday, June 16

Economic Data/Events

BOJ rate decision: No changes expected with monetary policy

US University of Michigan consumer sentiment

Eurozone CPI

Italy CPI, trade

New Zealand PMI

Singapore trade

UK Bank of England inflation expectations survey

ECB’s Holzmann speaks at the Austrian National Bank’s presentation of updated economic forecasts

ECB’s Villeroy speaks at a tech conference in Paris

UK BOE inflation attitudes survey

Sovereign Rating Updates

Luxembourg (Fitch)

Norway (Fitch)

Turkey (Moody’s)

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.