After three rate decisions during the first week of July, the second week of July offers money supply from the world’s second largest economy, China, with inflation data for June from across the G-7 economies. While Germany and the United Kingdom both release their key consumer price indexes, much of the focus next week will come at the end of the week, with a heavy flow of data coming out of the United States between Thursday and Friday – fourteen data sets of ‘medium’ or greater importance – the markets’ collective eye will be on the world’s largest economy.

• Chinese New Yuan Loans (JUN): July 11-15 --:-- GMT

The People’s Bank of China has raised banks' reserve-requirement-ratio six times thus far this year in an effort to withdraw excess liquidity from capital markets, and as it appears that the rate decisions are working, at least on the lending side (inflationary pressures persist). The decline in loan growth last month suggests the tightening measures have had a significant impact on curbing credit expansion in the country, though not so in June: forecasts show an estimated 622.5 billion worth of loans given in June, versus 551.6 billion in May, after 739.6 billion in April. Ahead of said data, on Wednesday, the People’s Bank of China announced that it would be raising both the one-year deposit and lending rates, to 3.50 percent and 6.56 percent, a 25.0-basis point hike for each, in an effort to further curb inflationary pressures and lending.

• United Kingdom Consumer Price Index (YoY) (JUN): July 12 – 08:30 GMT

Even though inflation in the United Kingdom has subsided recently, having held at the same 4.5 percent rate in April and May, it’s clear that the continued period of low interest rates employed by the Bank of England has certainly allowed inflationary pressures to move in on the British economy, ultimately sapping the British of their purchasing power, and putting further downside pressure on growth. The 4.5 percent rate, however, is the highest such rate, since October 2008, just three-months after oil hit their all-time highs in July 2008. It’s clear that the Bank of England is ready to sacrifice purchasing power for economic growth, as evidenced by the Monetary Policy Committee’s decision to leave the key interest rate on hold at 0.50 percent at their most recent meeting on Thursday, so a reading above the projected 4.5 percent rate for June would not be unexpected. Join a DailyFX analyst for live coverage of event!

• United States Advance Retail Sales (JUN): July 14 – 12:30 GMT

Consumer demand is expected to continue to have remained weak in June, as a Bloomberg News survey shows that the median estimate for Advanced Retail Sales is a 0.0 percent rate of contraction last month. Retail sales contracted in May by 0.2 percent, slightly better than the expected reading of -0.5 percent. Nonetheless, the reading was the first negative print since June 2010. A recovery in consumer demand is an important part of the U.S. recovery, as little growth in the labor market – June’s nonfarm payroll report showed that the unemployment rate rose to 9.2 percent – has put increasing pressure on the Dollar as market participants seek other safe havens. Consumer demand is also important for U.S. growth, as it comprises nearly 70 percent of the aggregate GDP figure. That being said, the Advance Retail Sales figure is the most import data release for the United States this coming week. Join a DailyFX analyst for live coverage of event!

• U.S. Consumer Price Index (YoY) (JUN): July 15 – 12:30 GMT

In what is the second most important data release over the course of the second week of July, the consumer price index from the U.S. will likely be the single event that sparks the most price action across Dollar-based pairs, as market participants will use the report to shift their interest rate expectations for the Federal Reserve. Debate has heated up among Federal Reserve policymakers and FoMC voting members, to such a point that there is a clear divide over what direction the American economy is moving: the economy has recently hit a “soft patch,”though some officials still feel that a series of rate hikes are necessary by the end of the year (Fisher, Kocherlakota).Still, considering the significant slack in the economy, others have said that rates should be kept low for an extended period, even though quantitative easing round two ended on July 1 (Bernanke, Dudley, Lockhart). The headline CPI figure is expected to have grown by 3.6 percent in June, after increasing by the same rate in May and by 3.2 percent in April, on a year-over-year basis. Join a DailyFX analyst for live coverage of event!

• United States U. of Michigan Consumer Confidence (JUL P): July 15 – 13:55 GMT

Consumer confidence in the United States is forecasted to rebound slightly in July’s preliminary reading, disappointing in June. June’s reading remained above the 70.0 level, at 71.5, though down from 74.3 at the prior reading. The figure is expected to remain above said level, with a 72.6 initial forecast, according to a Bloomberg News survey. Part of the reason that confidence may show a slight rebound is that oil has recently come down from above $100 per barrel, a seemingly psychologically significant area for American consumers. Nonetheless, the rebound in confidence may be short-lived, as crude hovers below said level; a break above will certainly weigh on confidence. Also of note, with the August 2 deadline approaching for a debt ceiling agreement, that too could weigh on confidence. Join a DailyFX analyst for live coverage of event!

See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

Written by Christopher Vecchio, Currency Analyst

To contact the author of this report, please send inquiries to: cvecchio@dailyfx.com

Follow Christopher Vecchio on Twitter: @CVecchioFX