Fx week ahead: ECB meeting in focus

Jul 18, 2:31 am
Forex Afternoon

The British pound was the top performing currency last week with most of the gains coming after the BoE left interest rates unchanged against market expectations. The political developments in the UK also attributed to the GBP’s gains over the week. The Canadian dollar was the next top performing currency, gaining 0.68% for the week as the Bank of Canada left monetary policy unchanged.

Weekly Spot FX Performance – 15/07/2016
Weekly Spot FX Performance – 15/07/2016

The yen was the weakest link last week losing 4.45%. Following last Sunday’s election victory for Shinzo Abe’s LDP party, the markets are starting to price in policy easing from the BoJ later in July. The risk on environment also sent gold prices weaker, losing 2.57% for the week. Among the commodity risk currencies, the Kiwi was the biggest loser giving up 2.36% against the US dollar

Economic Calendar for the Week 18/07 – 22/07

18-Jul00:01GBPRightmove HPI m/m0.80%
09:15GBPMPC Member Weale Speaks
TentativeEURGerman Buba Monthly Report
15:00USDNAHB Housing Market Index6060
15:30AUDCB Leading Index m/m0.50%
19-Jul02:30AUDMonetary Policy Meeting Minutes
09:30GBPCPI y/y0.40%0.30%
GBPPPI Input m/m0.90%2.60%
GBPRPI y/y1.40%1.40%
GBPCore CPI y/y1.30%1.20%
GBPPPI Output m/m0.10%0.10%
10:00EURGerman ZEW Economic Sentiment8.219.2
EURZEW Economic Sentiment12.320.2
13:30USDBuilding Permits1.15m1.14M
USDHousing Starts1.17M1.16M
20-Jul07:00EURGerman PPI m/m0.20%0.40%
09:00EURCurrent Account24.9B36.2B
09:30GBPAverage Earnings Index 3m/y2.30%2.00%
GBPClaimant Count Change4.1K-0.4K
GBPUnemployment Rate5.00%5.00%
10:00CHFZEW Economic Expectations19.4
15:00EURConsumer Confidence-8-7
21-Jul05:30JPYAll Industries Activity m/m-1.00%1.30%
07:00CHFTrade Balance3.49B3.78B
09:30GBPRetail Sales m/m-0.40%0.90%
GBPPublic Sector Net Borrowing9.3B9.1B
12:45EURMinimum Bid Rate0.00%0.00%
13:30CADWholesale Sales m/m0.30%0.10%
EURECB Press Conference
USDPhilly Fed Manufacturing Index5.14.7
USDUnemployment Claims271K254K
14:00USDHPI m/m0.40%0.20%
15:00USDExisting Home Sales5.48M5.53M
USDCB Leading Index m/m0.20%-0.20%
22-Jul03:00JPYFlash Manufacturing PMI48.348.1
08:00EURFrench Flash Manufacturing PMI48.148.3
EURFrench Flash Services PMI49.649.9
08:30EURGerman Flash Manufacturing PMI53.654.5
EURGerman Flash Services PMI53.353.7
09:00EURFlash Manufacturing PMI52.152.8
EURFlash Services PMI52.352.8
10:00EURItalian Retail Sales m/m0.20%0.10%
13:30CADCore CPI m/m0.20%0.30%
CADCore Retail Sales m/m0.20%1.30%
CADCPI m/m0.50%0.40%
CADRetail Sales m/m0.00%0.90%
14:45USDFlash Manufacturing PMI51.951.3

Time: GMT+1

Currencies/Events to Watch this Week

AUD: Economic data from Australia this week is limited to the monetary policy meeting minutes which will be released on Tuesday, July 19th. The meeting minutes are from the RBA’s monetary policy meeting from early July where the RBA left interest rates unchanged.

JPY: Japan looks to a short trading with markets closed on Monday. Economic data over the remainder of the week includes the all industries activity which is forecast to fall 1.0% on the month, following a 1.30% increase previously. Preliminary manufacturing PMI data is also due and is expected to show a modest increase to 48.3 from 48.1 previously.

GBP: A busy week for the sterling, data includes the monthly inflation report. Headline inflation is expected to rise 0.40% following an increase of 0.30% previously. Excluding food and energy, core CPI is expected to rise 1.30% on the month, more than last month’s 1.20% increase. On Wednesday, the monthly jobs report is expected to show the unemployment rate unchanged at 5.0%, while average earnings is expected jump to 2.30% from 2.0% previously. UK retail sales numbers are out on Thursday with median forecasts pointing to a 0.40% decline, following a 0.90% increase.

EUR: The market focus will be on the ECB’s monetary policy meeting on Thursday. No major changes are expected from the ECB but expectations call for the central bank to tweak its QE parameters as the ECB is expected to run out of buying eligible bonds at the current pace. The Eurozone flash PMI numbers are due on Friday and estimates point to a weaker PMI reading for June.

CAD: A busy week for the Canadian dollar, data includes the wholesale sales which is forecast to rise 0.30% on the month, extending gains of 0.10% previously. Inflation numbers are due on Friday and forecast to rise 0.20% on the core while the headline inflation is expected to rise 0.50%.

USD: Data from the US next week is expected to remain soft with housing starts and building permits numbers due out on Tuesday. For the remainder of the week, economic data includes the existing home sales data and the flash manufacturing PMI numbers on Friday.

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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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