The markets remained rather dull so far this week. The Dow ended 22.02 pts higher at 16892.59 after initial dip to 16877.72. Asian equities are mildly higher with Nikkei 225 up 60 pts while HK HSI is up 50 pts at the time of writing. The Dollar Index continues to struggle in tight range around 81 handle as the forex markets are generally stuck in tight range. The markets could continue to stay in consolidative model today as traders would stay cautious ahead of the key events later this week, including US GDP, FOMC, NFP and ISM.
IMF said in a report that BoE's ultra loose monetary policy "might need to be adjusted quickly" if there's increasing inflationary pressures. The fund urged UK to "ensure that strong growth persists, without creating inflationary pressures or financial stability risks." It projected UK economy to grow at 3.2% in 2014, the highest among advanced economies. Regarding risks to the outlook, it noted that the withdrawal of unconventional monetary policies in the US, sharp slowdown in Eurozone and emerging economies, and increasing geopolitical tensions could disrupt the global economy.
Released from Japan, unemployment rate rose to 3.7% in June versus expectation of 3.5%. Household spending dropped -3.0% yoy in June versus expectation of -3.7% yoy. Retail sales dropped -0.6% yoy in June versus consensus of -0.4% yoy. Some economists doubted if the economy is really recovering from the April sale tax hike, which the government claimed. And there's chance that consumption could remain weak in the September quarter. Nonetheless, inflation would remain the key data BoJ watches for. Released from Japan last week, core CPI adjusted for tax hike dropped to 1.3% yoy in June. Some analysts noted that BoJ could be forced to ease policy again if core CPI breaks the 1% mark.
Looking ahead, UK will release mortgage approvals and M4 money supply today. US will release S&P Case-Shiller 20 cities house price. Nonetheless, Conference Board consumer confidence is the main focus and would improve slightly to 85.5 in July.