THE WEEK AHEAD

The Reserve Bank's interest rate decision headlines a basket of economic data in the week ahead, while the carbon tax finally comes into effect.

The week ahead brings a host of key economic indicators, headlined by the Reserve Bank of Australia’s decision on interest rates for the month.

Locally, the federal government’s much-debated carbon price reduction scheme finally takes effect.

Building approvals data and retail trade figures are due, along with private inflation data.

Overseas, United States factory orders figures and construction spending data will be announced.

Elsewhere, the Bank of England and the European central bank will make decisions on interest rates.

In corporate news, a few local groups will go ex-dividend, while Ford will release recent sales results in the US.

Carbon tax

The federal government’s highly-touted carbon pollution reduction scheme, part of its Clean Energy Future program, finally becomes official on Sunday.

The ‘carbon tax’ is expected to lead to a slew of price rises around the country, as the cost on businesses is passed down the line to consumers.

The day represents a big win for federal Labor, which has battled controversy, the Opposition and internal issues for years in its bid to have the scheme installed.

Opposition Leader Tony Abbott has vowed to scrap it if the coalition is elected to government.

RBA

The Reserve Bank of Australia will meet on Tuesday this week to make its decision on interest rates for the July.

The central bank cut interest rates by 25 basis points last month, following a 50 point cut in May, leaving the official cash rate at 3.5 per cent.

Investors will watch carefully after the minutes of the RBA’s last meeting showed increased uncertainty in Europe and clear evidence of a softening in global conditions led to the last cut. Instability in the region has continued since the last decision.

Analysts expect rates to be left on hold, but there is still speculation that another cut will occur before the end of the year.

Local news

The week in local news brings a small mix of private and public indicators.

Monday sees TD Securities and the Melbourne Institute release its monthly inflation gauge, along with the RP Data-Rismark Home Value index for June.

On Tuesday, building approvals data for May will be released by the Australian Bureau of Statistics. Analysts are tipping recent volatility in the data to continue, with a 10 per cent rise in approvals expected.

Wednesday brings retail trade figures for May from the ABS. Experts believe the data will show sales to have lifted by 0.6 per cent.

Thursday sees the ABS make trade balance data for May made available to the public. Economists are expecting the data to show a $300 million surplus for the month.

Corporate

Corporate news is thin on the ground this week.

On Monday, Graincorp goes ex-dividend, along with Programmed Maintenance Services.

In the US on Tuesday, Ford Motor Company will release sales results for June.

Offshore

A big week in overseas news sees important data out of several countries.

On Sunday, the official China manufacturing purchasing managers index for June will be released.

In the US on Monday, the ISM manufacturing index for May is due. Analysts are tipping the gauge to have eased by 0.9 points to 52.6.

May construction spending data is also awaited. Spending is expected to have lifted 0.2 per cent.

Markit manufacturing purchasing manager index data for June is due in the US and the United Kingdom.

Halifax house price data for June is also on tap in the UK.

Tuesday sees factory order data for May released in the US, along with new car sales for June.

Experts are expecting orders to have fallen 0.2 per cent in the month, while car sales are tipped have expanded 1.3 per cent.

In the UK, May consumer credit data is due, along with M4 money supply data for the month.

May mortgage approvals data and the June purchasing managers index for construction are also on tap.

Markets will be closed in the US on Wednesday for the Independence Day holiday.

In the UK, the Markit services purchasing manager index is due.

On Thursday, jobless claims data will be released, along with the weekly Energy Information Administration petroleum status report.

The ADP employment report and the ISM non-manufacturing index for June will also be released.

Analysts are tipping the ADP report to show 104,000 private sector jobs were created in June, while the ISM index is tipped ease 0.7 points to 53.0.

Weekly Mortgage Bankers Association mortgage applications data is also on tap.

Elsewhere on Thursday, the Bank of England will make its interest rate decision for the month.

The European Central Bank will also rule on its official cash rate.

Friday sees the US employment status report released, which includes the unemployment rate, non-farm payroll figures and average weekly earnings data.

Economists expect the data to show a lift of 90,000 jobs in June, leaving the jobless rate unchanged at 8.2 per cent.

In the UK, producer price index data for June is due.

Wrapping up

Rounding off the week, the European Union presidency will officially pass to Cyprus for the second half of 2012 on Sunday.

On Monday, ECB executive board member Joerg Asmussen will speak in Athens.

San Francisco Federal Reserve President John Williams addresses a function in San Francisco.

Tuesday brings a press conference in the US from International Monetary Fund managing director Christine Lagarde on the latest US economic report.

Wednesday sees Australian Cola Association chief executive officer Nikki Williams speak at an American Chamber of Commerce event in Brisbane.

On Friday, Federal Trade Minister Craig Emerson will speak at a Committee for the Economic Development of Australia function in Sydney.

Elsewhere, the European Council will issue its quarterly report on the euro area.

ECB chairman Mario Draghi and Italian Prime Minister Mario Monti will meet in France.