The Dow Jones Industrial Average closed higher early this week, rebounding from a slip last week as investors awaited key economic data, US CPI & PPI, for June which are due to be released next Wednesday & Thursday. Meanwhile, Federal Reserve officials issued statements that perhaps the upward trend in interest rates is nearing its end. The CPI of the world’s largest economy is expected to ease further to 3.1% YoY (the slowest growth rate since March 2021). On a monthly basis, it is also expected to only slightly accelerate by 0.3% MoM. Meanwhile, Core Inflation, which is closely monitored by Federal Reserve policymakers, is predicted to come in at 5% YoY and 0.3% MoM. Traders will be keenly focused on seeing if Inflationary pressures could be tamed further, which could explain the outlook for the interest rate trend where many traders have priced in a 92% probability of the Fed raising rates by 25bps at this month’s FOMC Meeting (as reported by Investing.com’s Fed Rate Monitor Tool). On the other hand, some Fed officials said on Monday that further rate hikes are still needed to bring down Inflation which is still too high, but the end of the US central bank’s current tight monetary policy cycle is approaching. Kicking off this Inflation data-laden week, deflationary pressures were revealed to be mounting in China as their Producer Price Index (PPI) fell 5.4% YoY in June due to equally weak domestic and foreign demand. The sharpest fall since 2015 and steeper than analysts’ estimates of a decrease of 5.0%. Additionally, the consumer price index was flat at 0% due to an accelerating drop of 7.2% in pork prices. The CPI that failed to meet the consensus of 0.2% was the slowest growth since 2021. The data release strengthened speculation that China’s central bank will continue to cut interest rates and unveil new stimulus measures to provide fuel for the post-pandemic economic recovery. The weak economic data from Chinese sent global crude oil prices correcting by around 0.9% (after last week’s increase of almost 5%) on the prospect of falling demand from the world’s largest oil importer. Today comes Europe’s turn to release a number of important data related to employment and wages (UK), followed by Germany who will announce their June Inflation data. Germany will also reveal its sentiment & economic outlook for the next 6 months through the German ZEW Current Conditions & Economic Sentiment (July) economic data which is predicted to still imply an aura of pessimism.
Bank Indonesia (BI) noted that consumer confidence in economic conditions has decreased slightly, reflected in the June Consumer Confidence Index (CCI) at 127.1, down slightly from 128.3 in May. BI believes that the reading is still maintained in the strong zone, supported by consumer optimism that the Current Economic Conditions Index (CCI) and Consumer Expectations Index (CEC) remain solid. The JCI successfully closed in the positive zone of 6731.04 (plus 14.58 points / +0.22%) supported by Foreign Net Buy of IDR169.66 billion. Technically, JCI again secured a position above MA50 Support (6728) thus has the potential to continue the upward swing to try the crucial Resistance of 6765. NHKSI RESEARCH suggests to prepare for Average Up whenever a valid break out occurs.
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