Tomorrow and Friday are shaping up as two important days for the New Zealand economy, with some major data to be released which could influence Reserve Bank policy.
Tomorrow starts with another GlobalDairyTrade auction to brace for more bad news.
The signs are not good, especially after the recent ructions in financial and commodity markets and China's prominence in them all.
''It adds more downward pressure to a market suffering the perfect storm of ongoing supply expansion, soft demand and trade embargoes,'' BNZ economist Doug Steel said yesterday.
The BNZ had lowered its 2015-16 milk price forecast to $4.70 a kg of milk solids from the $5.20 price it settled on two weeks ago.
Many fast-moving components were now influencing international dairy prices, he said.
Currently, the BNZ believed $4.70 was best aligned to the middle of a very wide range of possible outcomes when the season's figures were finalised in 12 months' time.
Fonterra might be tempted to review its $5.25 kg/ms forecast before the end of the month, not that the bank had heard anything one way or another, but the co-operative had given a very late July update in both of the past two years, Mr Steel said.
Later in the morning, just 15 minutes before the 10.45am consumer price index release, June's Performance in Manufacturing Index will be released.
The PMI will follow on from the slow results of 51.7 and 51.5 for April and May respectively.
Friday completes the data releases for the week when ANZ publishes its June job advertisements at 10am and the July consumer confidence reading at 1pm.
Mr Steel said the BNZ had settled on a June quarter rise of CPI inflation - the official measure - of 0.6%, lifting annual inflation to 0.4% from 0.1% in the three months ended March.
The Reserve Bank has an inflation target of between 1% and 3%.
The latest BNZ forecast was lower than the bank's initial estimate, following the latest June food price index.
Food prices did rise in June but the 0.5% increment was less than the 1.2% the BNZ anticipated, he said.
''This was not a major miss in volatile month food prices but enough to nudge down our CPI estimate, nonetheless.
Food prices are 0.1% lower than a year ago.
''While a lower New Zealand dollar will start exerting some upward pressure over time, don't look for it too early, given the downdraught from international commodity prices.''
The Reserve Bank in its June Monetary Policy Statement anticipated quarterly CPI inflation of 0.4% and annual inflation to be 0.3%.
That still looked low given the lower-than-expected food prices, Mr Steel said.
The market looked inclined to react to negative, rather than positive, data.
The headline CPI expected for the second quarter, while signalling a turning point, would hardly look strong.
Anything that looked underwhelming would encourage the market to lower its official cash rate sights even further.
''Bear in mind that the second quarter is too soon for the CPI to be reflecting the recent correction in the currency. That's something for the subsequent quarters.
''For the second quarter, we think CPI inflation will be primarily driven by a bounce in fuel prices and housing-related goods and services.''
Forecasts
• Inflation higher in June but still low.
• Market expects 0.5% increase in June quarter and 0.3% for year.
• Dairy prices to fall again; milk price forecast lowered.
• PMI, job ads and consumer confidence data due.
