Markets will focus on Japan's Tankan large manufacturing index for the second quarter. The consensus forecast is looking for the large manufactures' index to decline to a reading of +3 compared to the first quarter's +11 reading while the outlook index for large manufacturing is projected to fall to a score of +2 from +7. The Tankan non-manufacturing index is expected to show a reading of 8 down from the first-quarter's reading of 12.

According to a report from Fortis Bank, the survey is likely to have "suffered from the ongoing rise in commodity prices, which are eating into consumers' purchasing power (this should show up by a fall in the domestic demand and supply conditions)."

Tuesday is a busy day in Australia with the release of the Reserve Bank of Australia's interest rate announcement. The consensus is for the central bank to leave rates on hold at 7.25%.

Riki Polygenis, an economist from ANZ, said the central bank still has time to stay in a wait-and-see mode to assess current economic conditions.

"While we believe the RBA will have to [hike] rates further this year, it can afford to wait at this stage and assess whether domestic demand is slowing as it requires," Polygenis wrote.

Australian markets will also receive May's building approvals report, which is expected at -3.4% in May following the 7.8% rise in April.

And finally, markets will be interested in May's retail sales, which are expected tp pick up 0.1% in May following a decline of 0.2% in April.

Economists at TD securities forecast retail sales to fall slightly further. "Retail sales growth has borne the brunt of tighter financial conditions while higher petrol, food and dwelling costs have siphoned disposable income away from discretionary expenditure," the TD economists wrote. "The decline in employment in the month is likely to act as a further drag on overall spending.

All times in EDT.

Monday

19:30 AU AiG Performance of Mfg Index June Prior: 51.2

19:30 AU HIA Home Sales (M/M) Prior: 0.1%

19:50 JN Loans & Discounts Corp (Y/Y) May Prior: -0.3%

19:50 JN Tankan Large Manufacturers Index 2Q Exp: 3 Prior: 11

19:50 JN Tankan Large Mfg Outlook 2Q Exp: 2 Prior: 7

19:50 JN Tankan Non-Manufacturing 2Q Exp: 8 Prior: 12

19:50 JN Tankan Non-Mfg Outlook 2Q Exp: 7 Prior: 13

19:50 JN Tankan Large All Industries Capex 2Q Exp: +2.0% Prior: -1.6%

21:30 JN Labor Cash Earnings (Y/Y) May Exp: +0.7% Prior: +0.6% Revised: +0.8%

Tuesday:

00:30 AU Reserve Bank of Australia Cash Target Rate Exp: 7.25% Prior: 7.25%

1:00 JN Vehicle Sales (Y/Y) June Prior: -6.1%

2:30 AU RBA Commodity Index SDR (Y/Y) June Prior: +28.6%

19:50 JN Monetary Base (Y/Y) June Prior: -0.9%

21:00 AU DEWR Skilled Vacancies (M/M) June Prior: -0.1%

21:30 AU Retail Sales May Exp: +0.1% Prior: -0.2%

21:30 AU Building Approvals (M/M) May Exp: -3.4% Prior: +7.8%

21:30 AU Building Approvals (Y/Y) May Exp: +7.2% Prior: +5.2%

By Steve Stecyk, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

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