Forex Weekly Outlook: Japanese GDP slides, Fed minutes express concern

The upcoming week will see the UK and the eurozone release consumer inflation data. As well, Japan releases GDP for the second quarter. 

In the Eurozone, CPI was revised to 0.4%, up a notch from 0.3%. The core reading came in at 1.2%, confirming the initial read.

British inflation levels moved higher in July. Consumer inflation climbed to 1.0%, up from 0.6% beforehand. The core reading also pointed higher, rising from 1.4% to 1.8%. Both releases beat expectations.

Japan’s economy lurched lower in Q2, falling 7.8%. The estimate stood at 7.5%. This reflected the strict lockdown measures in April and May which paralyzed the economy.

In the US, the Philly Fed Manufacturing index slowed to 17.2, down from 24.1 beforehand Unemployment claims surprised by climbing to 1.1 million, above the estimate of 930 thousand. The Federal Reserve minutes were dovish. Members stated concern about the continuing adverse impact of Corvid-19 on the US economy. The minutes also reiterated a call from Fed Chair Jerome Powell on the need for a fiscal package from Congress to boost the struggling economy. The week ended with good news from the manufacturing sector, as Manufacturing PMI improved to 53.6, its highest level since February 2019.

1. Bank of Japan Core CPI: Tuesday, 5:00. This is the preferred inflation gauge of the Bank of Japan, so investors will be monitoring it carefully. The index ticked up to 0.1%, up from 0.0% beforehand. Little change is expected in the June release.
2. German GDP: Tuesday, 6:00. The German economy plunged 10.1 in the second quarter, reflective of the enormous damage caused by Covid-19. The final reading is expected to confirm the initial read.
3. US GDP: Thursday, 12:30. The initial estimate for GDP in Q2 came in at a staggering -32.9%. The second estimate is expected in at -32.5%, so the market reaction to the reading is expected to be muted.
4. French GDP: Friday, 6:45. The previous release of Q2 growth data was dismal, with a reading of -13.2%. This release will likely confirm the initial figure.
5. Canada GDP: Friday, 12:30. Canada releases GDP on a monthly basis. In May, the economy showed a gain of 4.5%, bouncing back from a sharp decline of 11.6% a month earlier. Another gain is projected for June, with an estimate of 5.2%.

All times are GMT