In Australia, the focus will be on consumer price inflation data for the June quarter with the CPI out on Wednesday, and the Producer Price Index out later today.
Friday’s import and export indexes produced the expected outcomes of big falls in the June quarter.
Export prices slid 21% in the quarter, after the 5% drop in the three months to March in the preceding quarter.
That left the export index down 0.2% for the year as prices for iron ore and coal plunged, as expected in the June quarter with new contract years starting for buyers in Asia.
The major fall in exports was a 37% drop in the prices received for coal, coke and briquettes and a 23% fall in the prices of metal-producing ores including iron ore.
The 12% rise in the dollar in the quarter also cut export returns.
Import prices also fell sharply in the quarter, dropping 6.4%, mainly as a result of the stronger dollar.
The fall was the biggest since import price records were first collected in the early 1980s, according to the Australian Bureau of Statistics.
Over the year to June 2009, the Import Price Index fell by 5.9%.
The fall in import costs and the higher dollar (plus the rise in oil prices) will impact both producer prices and on the CPI.
The AMP’s Dr Shane Oliver expects headline inflation to be 0.5% in the June quarter or 1.5% year on year, with underlying inflation is likely to have averaged 0.6% in the quarter or 3.8% year on year.
"The main influences on inflation in the June quarter are likely to have been higher petrol prices, solid gains in food prices and seasonal increases in clothing and health prices," he said.
"A fall in the headline inflation rate below the target range of 2 to 3% will be good news after the inflation problems of a year ago.
"But it won’t be enough on its own to bring on another interest rate cut given that the RBA has already cut the cash rate pre-emptively and very aggressively.
"As well that the underlying measures of inflation are still relatively high.
"That said we expect a further fall in inflation over the year ahead in lagged response to sub-par growth and the recent rebound in the Australian dollar," Dr Oliver said.
The RBA has said that it would look to cut rates if falling inflation allows it, and we will get another chance to read that reasoning tomorrow with the release of the minutes of the Reserve Bank of Australia’s board meeting a fortnight ago.
On July 22 and 23, Guy Debelle, Assistant Governor (Financial Markets) at the RBA appears in public venues in Melbourne and Sydney, according to the bank.
The 2009 corporate reporting starts with GUD today and Alesco tomorrow (confirming guidance of a loss from 10 days ago).
Production reports are expected from BHP Billiton today, Woodside and Santos are expected this week, along with a host of other miners.
On Wednesday we will get the first indication of how retailers went in the last quarter and full year with Woolworths producing its June quarter and full 2008-09 sales figures.
The Ten Network’s owners, Canwest, received another 2 week extension from its creditors on the weekend.
In the US data for house prices, existing home sales, leading indicators and consumer confidence will all be released. Housing data will be watched closely for further signs of stabilisation or recovery.
Fed Chairman Ben Bernanke’s semi-annual Congressional testimony will also be watched for an update as to how the Fed sees the economic outlook and as to how it plans to eventually exit from current loose monetary policy settings.
Many analysts believe Bernanke’s words will draw more market attention than economic data, which starts on Monday with leading economic indicators for June, followed by existing home sales and weekly jobless claims on Thursday and an index of consumer sentiment in July on Friday.
The US profit reporting season will be watched very closely with around 154 S&P 500 companies due to report.
Major US industrials. Blue chips Apple, Microsoft, AMD, Lockheed Martin, Coca Cola, McDonalds, Texas Instruments, Caterpillar, DuPont, Boeing and 3M are due to release quarterly results, along with industrial manufacturer Eaton Corp. toymaker Hasbro Inc. and oil services giant Halliburton Co,
There are also more banks — including Bank of New York Mellon, Morgan Stanley, Wells Fargo, Capital One and American Express to report this week– while Credit Suisse will be the first European financial giant to report.
Analysts say some of the results to date have been so pleasing to stock investors that the main MSCI world stock index was on the edge Friday with its third or fourth highest weekly gain in its more than 20-year history. As it was most major markets had the best week since March, when the rally started.
This was down to solid performances from Goldman Sachs, JPMorgan and Intel and perhaps Johnson & Johnson.
But there were also disappointments, Google and General Electric, while Citi and Bank of America lifted fears of the extent of credit losses in the wider economy, especially among consumers and small and medium businesses.
The shakiness of CIT last week hasn’t helped as well and its fate will hopefully be sorted out over the weekend.
Elsewhere, in Europe flash PMIs (Performance of Manufacturing indexes) will show whether the positive surprise of the German orders and output data was a flash in the pan for the euro zone,
Ericsson, the world’s largest maker of wireless networks, is due to report second-quarter profits on Friday, Glaxo, the biggest UK drugmaker, will report second-quarter earnings on Wednesday; ABB, the world’s largest builder of power networks, and Danone, the world’s biggest yogurt maker, are also due to publish results this week.
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