June CPI data will provide markets with more clarity about inflationary pressures in the euro area
With the ECB already hinting at rate cuts and laying out the groundwork to head down the path of monetary easing, all it will take for them to start acting on that is confirmation via economic data. As such, expect inflation data from the euro area to be a major focal point for markets over the next few months.
In April, we saw a boost mainly due to Easter seasonality before the one-off effect faded and that resulted in a drop in inflationary pressures for May.
Although the readings for June are expected to show some steadiness, the fact that the inflation path isn't really converging towards the ECB's target amid flagging economic growth is a major concern for the central bank.
With the Fed also all but certain to cut rates in July and potentially more later this year, the ECB can't afford to not follow down a similar path or risk the euro strengthening - regardless of what they say that the exchange rate is not in their mandate - and potentially derailing their inflation path more than the struggles we're seeing now.
Here's the agenda for this week:
27/06 - Spain June preliminary CPI figures
27/06 - Germany June preliminary CPI figures (includes state readings)
28/06 - France June preliminary CPI figures
28/06 - Italy June preliminary CPI figures
28/06 - Eurozone June preliminary CPI figures