The Week Ahead: Focus on Personal Consumption Expenditures

As we move into the week of July 22 to July 27, 2024, several high-impact economic events are scheduled to take place. These events are critical for traders and investors as they can drive significant market volatility and influence trading decisions.

High Impact Economic Events
Tuesday 14:00 (GMT+0) – USA: Existing Home Sales (USD)
Wednesday 07:30 (GMT+0) -Germany: Flash Manufacturing PMI (EUR)
Wednesday 13:45 (GMT+0) – Canada: BoC Interest Rate Decision (CAD)
Wednesday 14:00 (GMT+0) – USA: New Home Sales (USD)
Wednesday 23:00 (GMT+0) – Korea: GDP q/q (KRW)
Thursday 08:30 am (GMT+0) – Germany: Ifo Business Climate (EUR)
Thursday 08:30 am (GMT+0) – USA: GDP q/q (USD)
Thursday 12:30 (GMT+0) – USA: Core Durable Goods Orders m/m (USD)
Friday 12:30 (GMT+0) – USA: Core PCE Price Index m/m (USD)

14:00 – United States: Existing Home Sales (USD)
The Existing Home Sales Report, which is released monthly, provides data on the sales and prices of existing single-family homes, condos, and co-ops across the United States and is an important indicator of the housing market’s health and consumer spending. Strong sales signal economic strength, while weaker sales suggest economic cooling.

In the latest report, existing home sales dropped by 0.7% and adjusted to the seasonal annual rate of 4.11 million, a 2.8% drop from the previous year. The median home sales price rose by 5.8% to $419,300, marking the highest price on record and the eleventh month of year-over-year price gains.
However, the inventory of unsold existing homes increased by 6.7% from the previous month. The increase in inventory could stimulate sales and help mitigate the upward pressure on home prices.

Analysts anticipate that the upcoming release for this week will decrease even further compared to the previous month, to 4.07 million units, as a result of rising sales prices, which may have a negative effect on the US Dollar.

07:30 am – Germany: S&P Global Manufacturing PMI (EUR)

Definition
The Purchasing Managers’ Index (PMI), a monthly indicator, provides information about business conditions in the manufacturing sector. A PMI above 50 shows expansion compared to the previous month, while a PMI below 50 indicates a contraction.

On June 21, 2024, the German Manufacturing PMI fell to 43.4 from the expected 46.4, signaling worsening economic conditions in Germany’s manufacturing sector, which opened the way for a decline in the EUR/USD pair, reflecting decreased investor confidence in the euro.

Economists are projecting a PMI of 42.8 for this week’s report, which is even worse than the previous month’s PMI.

13:45 – Canada: BoC Interest Rate Decision (CAD)
The Bank of Canada (BOC) will meet on July 24 to assess the current economic conditions, forecast future economic trends, and explain the rationale behind its interest rate decisions.

In its June 2024 meeting, the BOC implemented an anticipated 25 basis points reduction in its key interest rate, bringing it to 4.75%. The bank also indicated its intention to enact further rate cuts if inflation follows the projected deceleration.

The most recent CPI figures decelerated from 2.9% to 2.7%, providing the Bank of Canada with a reason to consider adjustments to interest rates at the upcoming meeting this week, with a forecast of an additional 25bps rate cut.

14:00 – USA: New Home Sales (USD)
The New Home Sales Report is an economic indicator released monthly that measures the quantity of newly built homes sold during a particular timeframe. Compared to the Existing Home Sales Report, it is considered a leading indicator and provides insights into the housing market’s health, consumer demand, and overall economic conditions.

The latest New Home Sales report, released in June 2024, showed a significant 11.3% decline in sales, down to 619,000 units compared to 698,000 units in the previous month. This decline was linked to increasing mortgage rates and reducing demand.

Analysts are cautiously optimistic about the upcoming New Home Sales report, anticipating 659,000 units, a modest sales increase driven by a slight easing in mortgage rates, and a gradual improvement in buyer confidence.

08:30 am – Germany: Ifo Business Climate (EUR)
The Ifo Business Climate is a key economic indicator for Germany, based on a monthly survey of about 9,000 businesses. It measures their current situation and expectations for the next six months, providing insights into overall business sentiment and economic trends.
A higher-than-expected reading should be taken as positive/bullish for the EUR, while a lower-than-expected reading may be interpeted as negative/bearish for the EUR.

The latest Ifo Business Climate report, released in June 2024, indicated a decline in business sentiment from 89.3 points in May to 88.6 points.

According to analysts’ forecasts, the Ifo Business Climate Index in Germany is anticipated to decrease to 87.0. This implies a more pessimistic sentiment among businesses, potentially negatively impacting the euro.

12:30 pm – USA: USD GDP q/q (USD)
The Gross Domestic Product (GDP) represents the total monetary worth of all goods and services produced within the United States during a specific period, typically reported on an annualized basis. It is a key indicator of economic performance and helps assess the economy’s overall health and growth trends.

The latest GDP report, released in April 2024, showed a decline in the growth rate in the first quarter of 2024. Specifically, the GDP for the first quarter of 2024 was 1.4%, down from the 3.4% recorded in the fourth quarter of 2023.

Analysts anticipate a more positive outlook for the upcoming week, with a projected increase of approximately 3.2%. This growth may have a favorable impact on the US Dollar.

12:30 pm – USA: Core Durable Goods Orders m/m (USD)
The Core Durable Goods Orders denote the total value of new orders made to manufacturers for long-lasting goods, excluding any orders related to transportation equipment. It is closely monitored because it can provide insights into consumer and business spending and broader economic conditions.

The most recent information from the US Census Bureau revealed that in June 2024, orders for durable goods in May 2024 went up by 0.1%, or $0.3 billion, to reach $283.1 billion. Nevertheless, excluding transportation, new orders decreased by 0.1% after experiencing three straight months of growth, which indicates some weakness in the manufacturing industry.

For June 2024, the Core Durable Goods Orders in the US are anticipated to reveal a slight uptick. Projections indicate that orders are set to experience a 0.3% increase on a m/m basis.

12:30 pm – USA: Core PCE Price Index m/m (USD)
The Core PCE (Personal Consumption Expenditures) Price Index m/m is a key indicator the Federal Reserve uses to gauge inflation and guide monetary policy decisions. It represents the difference in prices of goods and services purchased in the United States from one month to the next, excluding the impact of fluctuating costs related to food and energy.

The most recent release of the Core PCE Price Index in May 2024 indicated a slight 0.1% increase, a decrease from the previous month’s 0.3% rise. This suggests a marginal deceleration in the underlying trend of inflation, aligning with expectations and signaling a reduction in inflationary pressures.

The forecast for the Core PCE (Personal Consumption Expenditures) Price Index month-over-month (m/m) for July 25, 2024, is expected to show an increase of 0.2%.

Tuesday, July 23: GOOGL (Alphabet)
Tuesday, July 23: MSFT (Microsoft)
Tuesday, July 23: GE (General Electric)
Tuesday, July 23: GM (General Motors Company)
Tuesday, July 23: KO (Coca-Cola)
Tuesday, July 23: V (Visa)
Wednesday, July 24: T (AT&T)
Wednesday, July 24: F (Ford Motor Company)
Wednesday, July 24: META (Meta Platforms )
Thursday, July 25: AMZN (Amazon)
Thursday, July 25: INTC (Intel)
Thursday, July 25: MCD (McDonald’s)
Friday, July 26: XOM (ExxonMobil)
Friday, July 26: CVX (Chevron)