Aussie weakens on easing bias The minutes of the latest Reserve Bank of Australia policy meeting, when interest rates where left unchanged, showed once again the Bank’s strong data dependency.

Specifically, the Board noted that further information on inflationary pressures, the labour market, and housing market activity would be available over the following month.

Alongside the updated staff forecasts, which will be available to policymakers prior to the August meeting, these would allow the Board to refine its assessment on the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate.

As a result, the inflation data coming out end of July are likely to be even more important than usual, as they could be the catalyst for the Bank to decide on whether it should cut rates or hold its fire at the next meeting.

The Australian dollar weakened on the news and could stay under selling interest, especially if the nation’s incoming data are disappointing. (see technical outlook below).

• IMF updates World Economic Outlook The International Monetary Fund (IMF) is expected to publish its World Economic Outlook updates, including the UK growth forecasts. We believe that following the UK referendum result, the fund will cut its forecasts for the UK growth outlook. The previous economic projections had a baseline scenario in which the UK remains in the EU, and average around 2.2% over the medium term. The EU membership referendum was the main near-term economic uncertainty that posed downside risks to the forecasts. Now that this risk is known, it would be interesting to see how low the new growth forecast will be downgraded. A significant downward revision could give the bears sufficient reasons to push GBP/USD once again below 1.30.

• The impact of the “Brexit” vote may trigger a wave of downgrades for the rest of the Europe as well. Indeed, the fund warned last week that the Britons’ decision to leave the bloc would also hurt growth across Europe. In addition, IMF’s managing director Christine Lagarde recently warned that the Fund was also possible to downgrade world’s growth for the third time this year as global uncertainty mounts. In such a scenario, we could see demand for safe haven assets to revive somewhat.

• Today’s highlights: During the European day, we get the ZEW survey for July. Both the current conditions and the expectations indices are forecast to have declined, with the expectations print estimated to have fallen significantly. We believe that the outcome of the UK referendum is likely to have weighed on the sentiment of German analysts and economists, as the future of the EU-UK trading partnership remains uncertain. This could bring the common currency under renewed selling interest and perhaps push EUR/USD below the 1.1020 key support zone, which happens to be the lower bound of the range the pair has been trading since the last days of June.

• In the UK, the CPI for June is due out. Headline inflation is expected to have accelerated to +0.4% yoy from +0.3% in May, while the core rate is forecast to have risen to +1.3% yoy from +1.2% previously. Anyhow, given that these data were largely collected prior to the “Brexit” referendum, we expect them to attract less attention than usual, unless we have large deviations from the estimates.

In case the forecasts are met, we believe that the reaction in the pound is likely to be short lived. Overall, we believe that investors are likely to wait for July’s data in order to gauge the performance of the UK economy in the post-vote era, even though the BoE warned that those data will probably carry referendum distortions as well.

• From the US, we get housing starts and building permits both for June. Housing starts are expected to have rebounded from the previous month, while building permits are forecast to have slowed.