PFXS news for week ahead

Since we do not expect any major releases during Monday, let’s immediately talk about highlights on Tuesday.

Tuesday – China is to release its Industrial Production which is expected to accelerate to +6.3% from previous reading of +6.0%. Also, we get China’s Retail Sales growth rate forecasted to remain on hold at +9.0%. As we already know, China announced new tariffs on US products and tripled its products. On other side, on European morning, we can expect the German GDP expected to move higher to +2.6% since previous +1.6%. We can also get the German CPI rate forecasted to remain on hold at +0.3%. Then we get the UK’s Unemployment rate for June who is expected to remain on hold at +4.2%. This highlight can affect to create volatility for GBP pairs. British Pound has weakened because of Brexit events and if this “No Brexit Deal” is confirmed we can expect GBP dropping even further. From the Euro-zone we can get the German ZEW Economic sentiment expected to drop from previous read of -24.7 to -19.1. (This happening can be very important and good news for EUR).

Wednesday – We get Australia’s Wage Price Index. The figure is forecasted to advance to +0.6% from previous +0.5% (Asian session). If this news happens, we could see the AUD and NZD strengthening. The main reasons behind a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. In statement in August 2018 we see a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. The UK Inflation data is to be released. The CPI figure is forecasted to increase from previous +2.4% to 2.5% (European session). The monthly figure is forecasted to drop to -0.1% from previous +0.4%. Also, we get the American Core Retail sales and the Retail sales both for July. The Core Retail sales are expected to remain on hold at +0.4%, and the Retail sales are expected to decelerate to +0.3% (US session). If the outcome is released as forecasted we could see a weakening of the USD. On the other side, we get UK Retail Sales which are expected to accelerate to +0.2% from previous reading of -0.5% (European session).

Thursday – We get Australia’s Unemployment Rate. The rate is widely expected to remain At +5.4% (Asian session). After that, we get the US Housing Starts for July. The indicator is expected to increase to 1.250 M (American session). The USD seemed to regaining some strength it lost at the beginning of the week. USD is superior over emerging market currencies! (Even we have actual trade war).

Friday – We can get Canadian Core CPI rate for July. Expected level is 0.1%.

PFXS news for week ahead (July 23rd -27th)

On Monday, in the American session we get the Canadian Whole Sale Sales for May. The previous reading release in June was at 0.1%. Any reading above that figure should be taken as good news for the CAD while on the opposite any reading below could be taken as negative and could hurt the Loonie. Later in the American session we get US Existing Home Sales for June. The rate is forecasted to increase and reach 5.44 M compared to previous reading of 5.43 M while the Existing Home Sales are expected to increase to +0.5% mom from previous reading of -0.4% mom.

Should the actual rates meet the forecast we could see the USD caught in mixed financial data, as it would indicate the monthly rate increased but the overall reading has a minor decrease in home sales for June. Please be advised that Existing Home Sales are a very important indication of a healthy economic outlook.

On Tuesday, we get a number of PMI’s from Asia and Europe. Early in the Asian session, the Japanese Manufacturing PMI for July is to be released. The rate has no forecast at the moment, however, the previous reading was at 53.0. A higher figure than the one previously released could be taken as positive for the JPY.

In the European session we get Germany’s, France’s and Euro-zone’s preliminary PMI’s for July. Please note all European PMI’s are set to drop and should the actual readings meet the forecast we could see the common currency weakening as such readings could be regarded as a continuation of Euro-zone’s lukewarm to negative financial indicators. Please note, on the same day the EU Finance Ministers Meeting will take place but the start time is undisclosed.

On Wednesday, in the Asian session we get Australia’s inflation data for June. The quarterly CPI rate is forecasted to accelerate and reach +0.5% yoy compared to previous reading of +0.4% yoy as well as the yearly CPI rate which is forecasted to reach +2.2% yoy compared to previous reading of +1.9% yoy.

Should the actual rates meet the forecasts we could see the Aussie strengthening. We would also like to stress the fact that in the previous week Australian labour market report came out impressively strong for June. It was noted that with the labour supply still growing, less upward pressure was applied on wages and inflation so Reserve Bank of Australia is not expected to rate hike anytime soon.

In the European session we get German Ifo Business Climate Index for June. The rate is forecasted to drop at 101.5 from previous release 101.8. Should the actual rates meet the forecast we could see the common currency weakening somewhat, though it must be noted that due to the small decrease the market could perceive it as a muted event. However, any greater reading both negative and positive could create volatility for the EUR.

In the US session we get the US New Home Sales rate for June. The US New Home Sales rate is forecasted to drop and reach 0.670 M compared to previous reading of 0.689 M. Should the outcome be the same with the forecast, the greenback could weaken. However, the difference is not so significant, so the reaction could be rather minor.

On Thursday, in the European session, ECB will announce its interest rate decision. The bank is widely expected to remain on hold at 0.00%, as EUR OIS imply a probability for the bank to remain on hold at 97.61%. If the interest rate decision comes out as expected, we could see the market’s attention shifting to the accompanying statement and the following press conference. Should there be any signs of the bank starting to unwind its QE program as suggested by ECB officials previously, we could see the common currency gaining ground. Please be advised that the interest rate decision and the following press conference may leverage volatility on EUR crosses. It is expected that the asset purchases could end this year, as announced, and the market doesn’t expect an update on the policy path until March.

In the US session, we get the US New Home Sales for June. The forecast implies in increase to +2.5% from a previous count of -0.4%. Please be advised the USD could strengthen on the release of the news, should the forecast be realized.

On Friday, early in the European session we get UK’s Nationwide HPI readings for July. The UK’s yearly Nationwide HPI rate previous reading of +2.0 % yoy while the monthly Nationwide HPI headline CPI rate’s last reading was +0.5% mom.

Should the release exceed the previous readings, we may see the GBP gaining some momentum. However, most of the attention in the UK is placed on the Brexit as it is turning out to be a very difficult topic to deal with. The UK remains divided on how the matter should be dealt with and so Cable has been kept down lately.

In the American session we get the US GDP rate for July. This is the most significant event for the day and the US GDP rate is forecasted to accelerate to +4.1% qoq compared to previous reading of +2.0% qoq. Should the headline rate’s actual reading meet the forecast and the US GDP rate accelerate as well, we could see the greenback getting some support. In addition and regarding the US, during the past week Powell said the Fed will continue to slowly raise interest rates for now’ in order to keep inflation near target amid a robust conditions in the U.S. labour market.

PFXS news for week ahead (3rd Week of June)

Next week’s market movers:

  •  On Monday, we get Japan’s Trade balance for May.
  • On Tuesday, Reserve Bank of Australia’s  meeting minutes will be released.
  • On Wednesday, the US Current Account balance for quarter 1 is due out.
  • On Thursday, we get New Zealand’s GDP growth rate for Q1 and later the Bank of England’s interest rate decision could keep the markets on its toes.
  • On Friday, we’ll have a busy day as we get Japan’s inflation data for May, France’s, Germany’s and Euro-zone’s PMIs, Canada’s inflation data for May and Canada’s retail sales growth rate for April. Be advised that on Friday the OPEC meeting will be nearing a close and we could have some volatility in oil prices.

In the next week a number of financial data releases could attract the market’s attention. Our team handpicked the ones which it considers as the most influential and discusses their possible forecasts and their respective effects on various currencies.

On Monday, during the Asian session we get Japan’s trade balance figure for May. The figure is expected to be a deficit of -235.0 B compared to previous reading of +626.0 B. Should the actual figure meet the forecast we could see the yen weakening as the figure would not only be reduced but also taking a negative sign signaling trouble for the Japanese economy which highly export oriented.

On Tuesday, in the Asian session, Reserve Bank of Australia’s (RBA) last meeting minutes will be released. The minutes are to shed light into the bank’s dovish comments contained in the accompanying statement. Especially any opinions regarding the inflation rate remaining low as well as the wage growth rate should illuminate the economic landscape of Australia more. Also any comments made the household consumption and the direction of the US international trade policy would be interesting. Please be advised that market at the time of the release of the decision treated the meeting as a non-event, however it might be the case that the minutes may have a couple of surprises in them.

On Wednesday, during the American session the US Current Account Balance for Q1 is due out. The balance is expected to be a slightly narrowed deficit of -125.0 B compared to previous reading of -128.2 B. Should the actual figure meet the forecast we could see the USD getting some support in these times of extensive tariffs.

On Thursday, early in the Asian session, we get New Zealand’s GDP growth rate for Q1. The rate is forecasted to tick down reaching +0.5% qoq compared to previous reading of +0.6% qoq. Should the actual rate meet the forecast we could see the Kiwi weakening as the deceleration of the rate would be the second in a row weakening the prospect of growth for the economy of New Zealand. In the European session we get the star of the week, namely the Bank of England interest rate decision. The rate is currently forecasted to remain unchanged at +0.50%. The argument for the bank to remain on hold, is strengthened as currently GBP OIS implies a probability of 92.52% to remain on hold. The vote is currently forecasted to be for 7 votes in favor for the bank to remain on hold and 2 votes for the bank to hike rates. Should the interest rate remain unchanged, we could see the market’s attention turning to the accompanying statement. Should the accompanying statement have a more hawkish tone rather than neutral, based for example on the argument that the inflation rate is higher than Band of England’s target we could see the pound strengthening. Should on the other hand a more pessimistic view prevail say for example due to the uncertainty of the Brexit negotiations or the low GDP growth rate we could see the pound weakening. Also, should the votes for a rate hike increase we could see the pound gaining ground and vice versa.

On Friday, during the Asian morning, Japan’s inflation data for May are due out. The core CPI rate is forecasted to remain unchanged at +0.7% yoy while the headline CPI’s rate last reading was at +0.6% yoy. Given the accompanying statement of the latest BoJ interest rate decision, inflation is expected to range between +0.5% yoy and +1.0% yoy. Should the reading be at the lower end of the spectrum we could see the Yen weakening as such a reading could imply that Bank of Japan may become even more hesitant for a possible tapering of its massive stimulus program.

In the European session we get Germany’s, France’s and Euro-zone’s preliminary PMI’s for June. All PMI’s set to drop with the exception of Germany’s services PMI which is forecasted to rise to 52.2 compared to previous reading of 52.1 and France’s Services PMI which is forecasted to remain unchanged at 54.3.

Should the actual readings meet the forecast we could see the common currency weakening as such readings could be regarded as a continuation of Euro-zone’s lukewarm to negative financial indicators.

In the American session we get Canada’s inflation data for May. The last reading for the Bank of Canada Core CPI rate was at +1.5% yoy and for the headline CPI rate was at +2.2% yoy. Any higher readings could increase further the possibility of a potential rate hike in the July 11th meeting as they will be the last readings before the meeting. Given that, we could see the CAD strengthening should there be any acceleration of the inflation rates. From Canada we get also the retail sales growth rate for April. The rate’s last reading was of +0.6% mom. Should there be a higher reading we could see the Loonie getting some support as an acceleration of the rate could imply that the Canadian consumers are willing and able to place more in the Canadian economy hence may have a more optimistic view of the economy. Also a possible acceleration could imply that there are healthy inflationary pressures ahead. Last but not least, the OPEC meeting will be taking place in Vienna during the 21st and the 22nd of the month. The meeting could create volatility in oil prices especially if there are any headlines about a possible loosening of the production curbs in oil, which OPEC and its allies had decided in the past.