Key events to watch in the week ahead: 26-30 June 2023
What are some of the key events to watch next week?
This week’s overview
The rally in Wall Street cooled amid the holiday-shortened week, as the aftermath of the Federal Open Market Committee (FOMC) meeting was followed up with a series of hawkish Fedspeak. While the comments did not trigger much of a change in rate expectations from the Federal Reserve (Fed) funds futures pricing, the lack of any near-term catalysts have prompted US indices to take a breather, as technicals hover at overbought conditions.
Inflation will remain in the spotlight next week, with fresh figures for Australia’s monthly Consumer Price Index (CPI) and US core Personal Consumption Expenditures (PCE) price index on watch to lead expectations on where monetary policies are headed next. China’s Purchasing Managers' Index (PMI) readings will be on the radar as well, with market participants hoping to seek for any pockets of resilience in the China’s recovery story.
Here are three events to watch next week:
28 June 2023 (Wednesday): Australia’s monthly CPI indicator
Despite a surprise rate hike from the Reserve Bank of Australia (RBA) early this month, the meeting minutes stated that the recent rate decision was “finely balanced”, which points to some reservations among policymakers. The conflicting tone has left market rate expectations undecided between a rate pause and a 25 basis-point hike at the July meeting, or even how far the peak rate may have to go.
The upcoming inflation data may provide some clarity. While inflation has largely eased since the start of the year, the pace of moderation clearly matters now, with RBA’s forecast for inflation to return to the top of its target range only by mid-2025. Having already seen an upside surprise in April, any persistence in inflation will likely reinforce the need to push on with further tightening and aids to underpin the Australian Dollar.
30 June 2023 (Friday): US core PCE price index MAY
Being the Fed’s preferred measure of inflation, the US core PCE price index has shown little signs of easing since the start of the year, with April 4.7% year-on-year growth matching that of January 2023. Three months of no-progress may explain the +0.3% upward revision in the Fed’s 2023 core PCE projections (3.9% versus 3.6% in March) at the latest FOMC meeting, which forces US policymakers to adopt a more hawkish rate outlook.
Despite the aggressive tone from the Fed, Fed funds futures pricing remains unswayed, with expectations well-anchored for the Fed to deliver its last 25 basis-point hike next month and rate cuts as early as January next year. With that, a softer inflation read next week will be looked upon to provide the much-needed justification. If progress on the core PCE inflation front remains lacking, it may call for the need for a hawkish recalibration in rate expectations, which may challenge the current risk environment.
30 June 2023 (Friday): China National Bureau of Statistics (NBS) manufacturing and services PMI JUN
A series of downside surprises in economic data since April this year has led China’s reopening optimism to fizzle out, with its economic surprise index heading back into negative territory after a short-lived reopening boost.
While recent round of monetary easing measures may be a step in the right direction, how much impact it will have on the economy still awaits to be seen and any positive impact could need some time to work its way through the economy. Therefore, the upcoming reading is likely to remain lacklustre, painting an uneven growth picture with the services sector doing the heavy-lifting while manufacturing weighs on weak external demand.
A lower-than-expected read could likely reinforce views that more needs to be done. Given that one month’s data does not make a trend, market participants may be seeking for signs of a more consistent recovery to provide greater conviction that the worst may be over. For now, a turnaround in the PMI figures remains out of sight.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.