Policy rates and inflation data are in focus next week. G10 inflation is again expected to come in soft, which in turn is suppressing rate expectations. Central banks will be meeting in the U.S., Japan, Norway, and South Korea this week. All are expected to be on hold, although, with the recent positive data from Norway, we could see a more hawkish tone out of the Norges Bank. Within the Euro area, we have Greek Q2 GDP data on Wednesday, and the consensus expects a decline of 1.1% quarter-on-quarter and 3.4% year on-year.
We expect the broader Eurozone/U.S. decoupling story to gain steam as the market parses
the U.S. retail sales data and the Eurozone Q2 GDP data. Continued divergence will cause the dollar to weaken further relative to its G10 counterparts. Outside the G10, China will release home price, trade balance, CPI, and retail sales this week. Home prices and IP gains should moderate further as the property market slows, but retail sales should gain on the back of a strong labor market.
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