In the European session, we don’t have anything on the agenda other than a couple of low tier releases like the final Spanish Q2 GDP report and the Italian business confidence data.
In the American session, we have the Canadian GDP, the US PCE and the final University of Michigan consumer sentiment report. The Canadian GDP for July is expected at +0.1% vs -0.1% prior. The data is unlikely to change anything for the BoC at this point unless we get a big deviation. The market is expecting another rate cut by the end of the year but a back-to-back move in October is still seen as a 50/50 chance. The Canadian employment and inflation data should be the most influential.
The US Core PCE Y/Y is expected at 2.9% vs 2.9% prior, while the Core M/M measure is seen at 0.2% vs 0.3% prior. The PCE is the Fed’s preferred inflation measure, but it’s generally less market-moving because it’s “old news”. Economists and analysts can accurately forecast the PCE inflation from the US CPI and PPI data. So, it’s known two weeks in advance and rarely deviates from the expected numbers. Fed Chair Powell did mention that they expect the Core PCE Y/Y to be 2.9%.
Lastly, we get the final University of Michigan Consumer Sentiment report and this is unlikely to be market-moving unless we get very big deviations, especially on the inflation expectations numbers
