Central Banks and US Inflation Data on Schedule This Week

By Peter Bukov|

Published: July 11 2022, 11:37 GMT+0

Central Banks and US Inflation Data on Schedule This Week

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It looks like the next week will be volatile again, despite the summer lull in the markets.

According to the most recent nonfarm payroll data from the Labor Department on Friday, the US economy added 372,000 jobs in June, more than the 250,000 forecast by experts. The unemployment rate stayed at 3.6%. After the data was announced, the US stock markets rose and the USD fell. However, sentiment quickly changed on Monday.

The rest of Monday and Tuesday are not expected to bring any significant economic news. However, on Wednesday, the Reserve Bank of New Zealand is likely to deliver a 50bps rate hike, bringing the Official Cash Rate to 2.5%.

Inflation Data Under Scrutiny

The Bureau of Labor Statistics (BLS) Consumer Price Index (CPI), which tracks changes in consumer prices for June, will announce its latest update on Wednesday. At 8.6%, the annual headline inflation is now at a 40-year high and is predicted to rise to 8.7% in June. The monthly change is expected to increase to 1.1%. The core inflation rate, which does not include volatile food and energy costs, is anticipated to have decreased from the 6% level seen in May to a rate of 5.7% in June. Core inflation peaked in March at 6.5% and has since moderated a little.

Meanwhile, the Bank of Canada is seen raising rates by 75 bps on Wednesday, bringing the primary rate from 1.5% to 2.25%. As a result, volatility could increase in the USDCAD pair as traders will look for clues about more rate hikes in the following monetary policy statement.

The BLS will also publish its June Producer Price Index (PPI) the day after that, reflecting inflation as seen by producers. The PPI is anticipated to have increased 10.8% year over year, matching the rate from the previous month but less than the most recent peak of 11.5% seen in March. At this rate, PPI inflation is almost at a 41-year high.

The most recent retail sales data from the US Census Bureau is anticipated to be released on Friday. In contrast to the 0.3% fall seen in May, analysts predict a 0.8% monthly gain in retail sales in June. Moreover, the most recent reading can offer insightful information on consumer confidence in the face of persistently rising inflation.

Last but not least, the preliminary reading of the University of Michigan’s Consumer Sentiment Index (MCSI) is due on Friday, expected to improve from 50 to 58.

Setups for This Week


Chart #1
Primary View
  • Our analysis last week was spot on, Gold pretty much collapsed over the past week
  • The price managed to break the 1784 USD/oz support, which is currently the closest resistance
  • The target is on the 1680 USD/oz (green) and chances that we will get there are huge
Alternative View
  • If the price rises back above the 1784 USD/oz the sell signal will be temporarily cancelled

Brent Oil

Chart #2
Primary View
  • The last week was a whipsaw. The beginning of the week brought us a strong decline and the second half brought us a bullish bounce
  • The price is locked between a crucial horizontal support on 100 USD/bbl (red) and the resistance on 108 USD/bbl (green)
  • The price climbing back above the 108 and breaking the black mid-term down trendline will be a strong buy signal
Alternative View
  • A breakout of the 100 USD/bbl support would be huge for the price of oil and would bring us a long-term sell signal


Chart #3
Primary View
  • The USDCAD is still putting pressure on the 38,2% Fibonacci
  • It’s the third time that the price is trying to climb back above that resistance
  • Rising pressure can mean the weakening of the resistance and the price closing a day above the 38,2% (and the upper line of the wedge) will mean a proper, long-term buy signal
Alternative View
  • A strong bearish bounce, possibly with a nice reversal pattern, would give a promising mid-term sell signal