Week Ahead-Powell testimony, French vote, RBNZ to drive markets
July 8 (Reuters) -Federal Reserve Chair Jerome Powell's semi-annual Congressional testimony, the outcome of France's parliamentary election, the Reserve Bank of New Zealand's rate decision, and inflation data from theU.S. and China will keep traders on their toes this week.
Powell's testimony on Tuesday will drive Fed expectationsas initial signs of a cooling economy andfalling inflation boost rate-cut hopes. The Fed'sMichael Barr, Michelle Bowman, Austin Goolsbee, Alberto Musalem and Raphael Bostic are also scheduled to speak during the week.
On the data front, all eyes will be on Thursday's CPI and Friday's PPI to gaugeif the slow but steady progress towards the Fed's 2% inflation target was sustained in June.Core CPI is forecastto hold steady at 0.2% while the PPI may nudge up to 0.1% from a 0.2% monthlyfall in May. Weeklyjobless claims and University of Michigan preliminary Julyconsumer sentiment and inflation expectations are the only other releases.
Europe has a very quiet week for data, with German June inflation the highlight, but thesurprise result of the second round ofFrance's election, which put it on course for a hung parliament, will be key for markets worried aboutfiscal largesse.
The RBNZ is widely expected to leave the official cash rate at 5.5% on Wednesday and warn of upside risks to consumer spending and inflation arising from the government's 2024 budget. This could be balanced by concern over a sluggish economy and deteriorating business confidence.
China's consumer inflation is likely to hold steady in June while producer price declines may continue to ease, but thepatchy economic recovery will maintain pressure for more stimulus. Trade datawill show whetherexports continue to provide some relief to the economy, though imports may stillhighlight the fragility of domestic consumption. June credit data may also be released this week.
Japan's data calendar is light with overtime pay, PPI, current account, trade and machinery orders due.
The UK publishes MayGDP, industrial and manufacturing production, and trade data.Bank of England Monetary Policy Committee member Jonathan Haskel speaks on UK inflationon Monday.
Australia's light data calendar includes consumer and business confidence and inflation expectations. There is no data of note from Canada.
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The risk premium on French debt has surged on election fears: https://reut.rs/4eLamyf
Nonfarm payrolls: https://reut.rs/3xTyiij
Krishna Kumar and Andrew Spencer are Reuters market analysts. The views expressed are their own. Editing by Sonali Desai
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