Analysts at Danske Bank suggest that a key focus today will be inflation releases in the Eurozone and the US, while the EU summit discussion in Brussels will be in focus notably with German Chancellor Merkel under pressure to bring back an EU-wide agreement on immigration.
Key Quotes
“In the eurozone, the June HICP figures are due for release. Headline inflation surprised on the upside in May, reaching 1.9% y/y, driven by higher oil prices. This has led the ECB to revise up its inflation forecast for 2018 to 1.7% (from 1.4%) in its new staff projections. We estimate the June figure at 2.0% y/y, but emphasise that headline inflation will only remain at this level for a few months before declining back to around 1.5-1.6% as the energy price base effects wear off. We expect core inflation to remain unchanged at 1.1%.”
“In the UK, GfK consumer confidence is being released. Lloyds business barometer and not least the final revision to the Q1 GDP estimate are probably not market movers as such, but might attract some attention as the Bank of England has left the door open for a rate hike in August depending on data in Q2.
“In the US, PCE core inflation numbers for May will be released today. Based on CPI, we expect PCE to rise +0.2% m/m, which translates into 1.9% y/y, up from 1.8%. We still believe there are upside risks to US inflation, which underpins our view of a total of four rate hikes being more likely.”
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