Week Ahead in FX: GDP Revisions, Yellen Speech

Jun 27, 4:28 am
FX_Charts

The Pound Sterling was the weakest currency last week losing 4.79% against the US dollar. The declines in GBPUSD came as the UK shocked the world by voting to leave the EU membership which sent ripples across the financial markets. GBPUSD fell to multi-decade lows on the news but managed to recover following the initial reaction. The shocking outcome saw investors flocking to safe haven assets with the Yen rising 1.84% on a week over week basis with USDJPY briefly breaking below the 100Yen psychological level.

Weekly Spot FX Performance – 25/06/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 25/06/2016 (Source: Finviz.com)

The euro was also hit by the Brexit verdict, losing 1.69% from a week ago. The Swiss franc was down 1.15% on the week, but this was mostly due to the SNB’s intervention in the financial markets which saw the CHF stabilize. The US dollar managed to gain in the turmoil as one of the preferred safe haven assets.

Fundamentals for the Week 27/06 – 01/07

Date Time Currency Detail Forecast Previous
27-Jun 09:00 EUR M3 Money Supply y/y 4.80% 4.60%
EUR Private Loans y/y 1.60% 1.50%
13:30 USD Goods Trade Balance -59.5B -57.5B
14:45 USD Flash Services PMI 52 51.3
28-Jun 07:00 EUR German Import Prices m/m 0.60% -0.10%
11:00 GBP CBI Realized Sales 9 7
13:30 USD Final GDP q/q 1.00% 0.80%
USD Final GDP Price Index q/q 0.60% 0.60%
14:00 USD S&P/CS Composite-20 HPI y/y 5.50% 5.40%
15:00 USD CB Consumer Confidence 93.2 92.6
USD Richmond Manufacturing Index 2 -1
17:00 CHF Gov Board Member Zurbrugg Speaks
29-Jun 00:50 JPY Retail Sales y/y -1.60% -0.90%
02:00 AUD HIA New Home Sales m/m -4.70%
07:00 CHF UBS Consumption Indicator 1.47
EUR GfK German Consumer Climate 9.8 9.8
All Day EUR Italian Bank Holiday
07:00 GBP Nationwide HPI m/m 0.10% 0.20%
All Day EUR German Prelim CPI m/m 0.10% 0.30%
08:00 EUR Spanish Flash CPI y/y -0.90% -1.00%
09:30 GBP Net Lending to Individuals m/m 2.9B 1.6B
GBP M4 Money Supply m/m 0.10% -0.10%
GBP Mortgage Approvals 65K 66K
13:30 USD Core PCE Price Index m/m 0.20% 0.20%
USD Personal Spending m/m 0.30% 1.00%
USD Personal Income m/m 0.30% 0.40%
15:00 USD Pending Home Sales m/m -0.90% 5.10%
15:30 USD Crude Oil Inventories -0.9M
21:30 USD Bank Stress Test Results
23:45 NZD Building Consents m/m 6.60%
30-Jun 00:05 GBP GfK Consumer Confidence -3 -1
00:50 JPY Prelim Industrial Production m/m -0.10% 0.50%
02:00 NZD ANZ Business Confidence 11.3
02:30 AUD Private Sector Credit m/m 0.50% 0.50%
06:00 JPY Housing Starts y/y 4.90% 9.00%
07:00 EUR German Retail Sales m/m 0.60% -0.90%
07:45 EUR French Consumer Spending m/m -0.10% -0.10%
EUR French Prelim CPI m/m 0.20% 0.40%
08:00 CHF KOF Economic Barometer 103.4 102.9
08:55 EUR German Unemployment Change -5K -11K
09:30 GBP Current Account -28.1B -32.7B
GBP Final GDP q/q 0.40% 0.40%
GBP Index of Services 3m/3m 0.40% 0.60%
GBP Revised Business Investment q/q -0.40% -0.50%
10:00 EUR CPI Flash Estimate y/y 0.00% -0.10%
EUR Core CPI Flash Estimate y/y 0.80% 0.80%
EUR Italian Prelim CPI m/m 0.20% 0.30%
12:30 EUR ECB Monetary Policy Meeting Accounts
13:30 CAD GDP m/m 0.10% -0.20%
CAD RMPI m/m 0.70%
CAD IPPI m/m -0.50%
USD Unemployment Claims 269K 259K
14:45 USD Chicago PMI 50.4 49.3
01-Jul 00:30 AUD AIG Manufacturing Index 51
JPY Household Spending y/y -0.90% -0.40%
JPY Tokyo Core CPI y/y -0.50% -0.50%
JPY National Core CPI y/y -0.40% -0.30%
JPY Unemployment Rate 3.20% 3.20%
00:50 JPY Tankan Manufacturing Index 4 6
JPY Tankan Non-Manufacturing Index 19 22
02:00 CNY Manufacturing PMI 50 50.1
CNY Non-Manufacturing PMI 53.1
02:45 CNY Caixin Manufacturing PMI 49.1 49.2
03:00 JPY Final Manufacturing PMI 47.9 47.8
06:00 JPY BOJ Core CPI y/y 0.80% 0.90%
JPY Consumer Confidence 41.1 40.9
07:30 AUD Commodity Prices y/y -10.00%
08:15 CHF Retail Sales y/y -1.70% -1.90%
EUR Spanish Manufacturing PMI 52.1 51.8
08:30 CHF Manufacturing PMI 54.9 55.8
08:45 EUR Italian Manufacturing PMI 52.7 52.4
08:50 EUR French Final Manufacturing PMI 47.9 47.9
08:55 EUR German Final Manufacturing PMI 54.5 54.4
09:00 EUR Final Manufacturing PMI 52.6 52.6
09:30 GBP Manufacturing PMI 50.2 50.1
10:00 EUR Unemployment Rate 10.10% 10.20%
14:45 USD Final Manufacturing PMI 51.4 51.4
15:00 USD ISM Manufacturing PMI 51.6 51.3
USD Construction Spending m/m 0.70% -1.80%
USD ISM Manufacturing Prices 63.9 63.5

Time: GMT+1

Currencies/Events to Watch this Week

AUD: Economic data from Australia for the week ahead is light with the AIG manufacturing index and new home sales data on the tap. The broader market theme following the Brexit is, however, likely to dominate the AUD in the coming week as investors continue to remain in a risk-off sentiment, which could see the AUD remain weaker.

NZD: New Zealand looks towards a quiet week with no major releases coming out with building consents and ANZ business confidence being the exception. Similar to the Aussie dollar, the Kiwi could also remain tied to the Brexit and the risk-off theme in the market.

JPY: Data from Japan next week will see the all-important Tankan manufacturing and non-manufacturing quarterly surveys, which were weaker at the start of the second quarter. The Bank of Japan’s Core CPI data is also expected to be coming out later in the week and is expected to

EUR: Data from the Eurozone is busy starting with the German inflation data for June. Estimates point to a 0.20% increase in headline inflation on a month over month basis, lower than May’s 0.30% increase. In France, inflation is also poised to rise at a weaker pace of 0.20% in June, down from 0.40% a month ago. The Eurozone inflation is expected to stay flat, unchanged for the month on a year over year basis.

GBP: Data from the UK will see the final revision to the first quarter GDP, which is expected to confirm that the UK’s economy expanded at a pace of 0.40%. Later in the week, manufacturing PMI is expected to be released. However, the sterling is likely to take its cues from the Brexit developments than focus on the economic fundamentals.

CAD: Canadian economic calendar is quiet for the most of the week with the exception of June 30th where the monthly GDP numbers are expected to be released. On a month over month basis, Canadian GDP is expected to rise 0.20%, following the -0.20% contraction a month ago.

USD: A busy week for the US dollar gets off with the final revision to the GDP. Q1 GDP is projected to be revised higher to 1.0%, up from the second revision at 0.80%. Later in the week, PCE data is also expected to show moderation with the core PCE expected to rise 0.20% on a month over month basis. Fed Chair, Janet Yellen’s speech is expected later in the week on June 29th. On Friday, US manufacturing ISM data is expected to show a soft print of 51.2 compared to 51.3 a month ago

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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