Main event will be the FOMC statement tonight (no press conference or newprojections at this meeting). We expect a slightly more positive tone on the labourmarket in line with Fed chairman Janet Yellen’s recent comments at her semi-annualtestimony to Congress. FOMC may also make the inflation language a bit less dovishas inflation has turned higher over the past three to four months – see FOMC preview,29 July.
Before the Fed meeting a number of interesting releases are due. At 14:30 CET USGDP data for Q2 are expected to show growth of around 3% in Q2 following the bigdecline in Q1. It will leave the first half at a very low level. However, forwardlookingindicators point to growth in H2 of 3-3.5% and job growth has picked up, sothe Fed is likely to feel confident about the outlook. The US also releases ADPemployment this afternoon expected to show a job gain of 225k in July.
In Europe focus will be on preliminary CPI data out of Spain and Germany, SpanishGDP for Q2 and the EU confidence indicators for July. Spanish CPI is expected todecline into negative territory to -0.2% y/y, while German inflation is projected todrop to 0.7% y/y from 1.0% y/y in June. We expect tomorrow’s euro flash CPI toprint a new cycle low at 0.4% y/y in July from 0.5% in the previous two months.
In Sweden we expect Q2 GDP to have improved to 1.0% q/q.
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