Calyon chief Japanese economist Susumu Kato expects a 5.1% year-over-year rise, from a previous 4.7% increase, to the corporate inflation indicator. He also believes that the increases won't stop there.

"In our view, domestic corporate goods prices would hit the peak around at +6.0% YOY, and would not surge to over +10% as in the days of oil crises in the past. The more important point would be i)how much firms would be able to pass elevated production costs to product prices, and ii) to what extent consumers would be compensated for the surge in inflation by expected rise in wages," he wrote. "Whatever the answers to those questions, those were what firms and consumers did not think about in the days of deflationary economy."

He continued that, "From this respect, we hold our view that moderate degree of rising inflation rate would be better and stimulate the economy compared to the days of deflation when they could only hope for its ends without being able to do nothing against it. Compared to 'wild price spiral' during the oil crises, present level of inflation should be manageable over time."

Capital Economics' Alvin Pontoh suggests that other releases will be of greater importance to Japanese markets, but nonetheless agrees that inflation is a hot topic in the country.

"The June Economy Watchers' Survey (Tuesday) and consumer confidence (Friday) are the highlights of the week," he wrote in a note to clients. "Unfortunately, the continuing surge in headline inflation is the dominant concern and suggests that both surveys will soften a little further."

In Australia, the macroeconomic highlight of the week will be the release of employment data for June. The unemployment rate is expected to remain flat at 4.3%, all the while, and the participation rate is expected to tick up to 65.3% from 65.2% in May.

"Next week's employment data for June will be crucial in shaping policy expectations ahead of the August meeting. We expect to see jobs growth rebound to +25k," economists from ANZ said, in spite of a consensus forecasted employment change increase of 10k.

All times in EDT.

Sunday: The Japanese official reserve asset figure for June will be released and Bank of Japan Governor Masaaki Shirakawa is set to speak at the BOJ's quarterly branch managers' meeting in Tokyo. The speech is to be followed by the release of the bank's report on the regional economy.

19:30 AU AiG Performance of Construction Index June Prior: +36.9

19:50 JP Official Reserve Assets June Prior: +$997.0B

20:30 JP BOJ Governor Shirakawa speaks at Quarterly Branch Meeting

21:30 AU ANZ Job Advertisements (M/M) June Prior: -1.7%

Monday: Australian markets will receive foreign reserve figures for June and NAB business confidence and conditions results.

2:30 AU Foreign Reserves June Prior: A$35.3B

19:50 JP Japan Money Stock M3 Y/Y June Exp: +0.7% Prior: +0.7%

19:50 JP Japan Money Stock M2 Y/Y June Exp: +2.0% Prior: +2.0%

19:50 JP Bank Lending including Trusts(Y/Y) June Prior: +1.5%

19:50 JP Bank Lending Banks Adjust Y/Y June Exp: +2.2% Prior: +2.1%

19:50 JP Bank Lending Banks ex Trust Y% June Prior: +1.6%

21:30 AU NAB Business Confidence June Prior: -4

21:30 AU NAB Business Conditions June Prior: +7

Tuesday: Machine orders in Japan will be one macroeconomic highlight in the Asia-Pacific on Tuesday. Month-over-month, the indicator is expected to have increased 1.1% in May, down from a previous 5.5% increase. On an annualized basis, a 3.7% decrease is expected, down from a 0.5% increase. In Australia, Westpac consumer confidence for July is due out, last sliding 5.6%.

0:30 JP Bankruptcies (Y/Y) June Prior: -1.5%

1:00 JP Eco Watchers Survey: Current June Prior: +32.1

1:00 JP Eco Watchers Survey: Outlook June Prior: +35.1

19:50 JP Machine Orders (M/M) May Exp: +1.1% Prior: +5.5%

19:50 JP Machine Orders (Y/Y) May Exp: -3.7% Prior: +0.5%

20:30 AU Westpac Consumer Confidence July Prior: -5.6%

21:30 AU Home Loans May Exp: -2.0% Prior: -3.0%

21:30 AU Investment Lending May Prior: +1.4%

21:30 AU Value of Loans M/M May

Wednesday: Australian employment data will be a focus for markets. The unemployment rate for June is expected to remain flat at 4.3%. In Japan, aside from weekly investment data, June's domestic CGPI figures will be released. A 0.6% month-over-month increase is expected, translating into a 5.3% year-over-year rise.

2:00 JP Machine Tool Orders (Y/Y) June Preliminary Prior: +1.4%

19:50 JP Foreign Buying Japan Bonds W/E 4-July Prior: -¥422.1B

19:50 JP Foreign Buying Japan Stocks W/E 4-July Prior: -¥516.3B

19:50 JP Japan Buying Foreign Stocks W/E 4-July Prior: +¥65.0B

19:50 JP Japan Buying Foreign Bonds W/E 4-July Prior: +¥496.9B

19:50 JP Domestic CGPI (M/M) June Exp: +0.6% Prior: +1.1%

19:50 JP Domestic CGPI (Y/Y) June Exp: +5.3% Prior: +4.7%

19:50 JP Current Account Total May Exp: +¥1934.8B Prior: +¥1380.9B

19:50 JP Adjusted Current Account Total May Exp: +¥1943.0B Prior: +¥1510.7B

19:50 JP Trade Balance - BOP Basis May Exp: +¥500.0B Prior: +¥634.7B

21:00 AU Consumer Inflation Expectation July Prior: +5.9%

21:30 AU Employment Change June Exp: +10.0K Prior: -19.7K

21:30 AU Unemployment Rate June Exp: 4.3% Prior: 4.3%

21:30 AU Participation Rate June Exp: 65.3% Prior: 65.2%

Thursday: There are no macroeconomic data releases or events scheduled in Japan or Australia.

Friday: Final Japanese industrial production for May will be released, last coming in with a month-over-month increase of 2.9% and a 1.2% year-over-year rise. Japanese markets will also receive consumer confidence readings for June. The headline index is expected to decrease to a level of 33.0 from 34.1. The households subcomponent last came in at 33.9.

0:30 JP Industrial Production (M/M) May Final Prior: +2.9%

0:30 JP Industrial Production (Y/Y) May Final Prior: +1.2%

0:30 JP Capacity Utilization (M/M) May Final Prior: -0.7%

1:00 JP Consumer Confidence June Exp: +33.0 Prior: +34.1

1:00 JP Consumer Confidence Households June Prior: +33.9

21:30 AU CBA/HIA House Affordability Q2 Prior: +103.1

By Ryan Szporer, 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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