Week in Focus 17th 21st August 2026

Week in Focus: 17th-21st August 2026 Highlights include: FOMC Minutes, Global Flash PMIs, UK Jobs, Inflation from Japan, Canada and UK • MON: Japanese GDP Prelim (Q2), Chinese Activity data (Jul), Canadian Inflation (Jul) • TUE: UK Jobs report (Jun/Jul), German ZEW Survey (Aug) • WED: UK Inflation (Jul), EZ Final CPI (Jul), FOMC Minutes • THU: Riksbank Announcement, PBoC LPR, Japanese Trade Balance (Jul), Australian Jobs Report (Jul) • FRI: Japanese CPI (Jul), UK Retail Sales (Jul), EZ/UK/US Flash PMIs (Aug), Canadian Retail Sales (Jul)

WEEK AHEAD JAPANESE GDP (MON): Japanese preliminary Q2 GDP growth is expected at 0.5% Q/Q (prev. 0.5%) and 2.0% annualised (prev. 1.8%), broadly maintaining the pace seen in Q1. Domestic demand is expected to remain the key driver, with private consumption seen rising 0.5%, while business investment is expected to moderate and external demand provide little support. Attention will be on whether resilient domestic activity strengthens the case for further BoJ normalisation, with a solid print likely to reinforce expectations for another rate hike later this year. Recent sources suggested the BoJ is reportedly set to raise interest rates as soon as September and is also considering accelerating subsequent hikes.

CHINESE ACTIVITY DATA (MON): Industrial Production is expected at 4.8% Y/Y (prev. 5.3%), Retail Sales at 1.6% (prev. 1.0%) and Fixed Asset Investment at -6.0% Y/Y (prev. -5.7%). Focus will remain on the divergence between relatively resilient industrial activity and continued weakness in domestic demand and investment. A softer-than-expected release would reinforce concerns about the Chinese growth outlook and calls for further policy support from Beijing.

CANADIAN INFLATION (MON): The Canadian inflation report will be closely watched for its implications for the BoC's next move on interest rates. The central bank is currently on hold as it assesses competing risks from elevated inflation and softer growth. Higher energy prices and continued uncertainty in the Middle East are keeping upside inflation risks alive, while ongoing trade uncertainty with the US continues to pose downside risks to the growth outlook. The previous inflation report was encouraging, with headline CPI easing to 2.8% Y/Y and core CPI cooling to 2.1%, both lower than their prior readings. Meanwhile, the average of the BoC's preferred Common, Median and Trimmed measures eased to 2.1% from 2.27%, pointing to some moderation in underlying price pressures. The BoC targets 2% headline inflation within a 1-3% control range, meaning headline inflation remains within the target range but towards its upper end, while underlying inflation measures are sitting much closer to 2%. The upcoming report will therefore be important in determining whether recent progress on inflation is continuing. Another soft report would strengthen the case for the BoC to remain patient, particularly given lingering downside risks to growth from trade uncertainty. Conversely, renewed strength in headline or underlying inflation, especially against the backdrop of higher energy prices, could bolster the case for further tightening. Regarding the policy outlook, Rabobank expects the BoC to remain on hold through year-end, while money markets currently price around 13bps of tightening by year-end, equivalent to roughly a 52% probability of a 25bp hike. Note, the policy rate is currently around the lower end of the BoC's estimated neutral range, meaning any further rate cuts would likely move policy into accommodative territory.

UK JOBS (TUE): The last series sparked modest GBP strength, as while the main components were broadly in-line, the overall series spoke to a relatively steady market, and while there are still some points of softening, they are nothing new. For the BoE, the wage data remains potentially the main point to watch, as it could provide a somewhat timely indicator of any early second round effects from the Middle East shock. But, aside from public sector awards skewing the associated print, the components continue to show a moderation in the rate of wage growth. For the April-June series, the labour market will likely continue to…