Fx week ahead: ECB meeting in focus

Jul 18 2016, 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

Date Time Currency Detail Forecast Previous
18-Jul 00:01 GBP Rightmove HPI m/m 0.80%
09:15 GBP MPC Member Weale Speaks
Tentative EUR German Buba Monthly Report
15:00 USD NAHB Housing Market Index 60 60
15:30 AUD CB Leading Index m/m 0.50%
19-Jul 02:30 AUD Monetary Policy Meeting Minutes
09:30 GBP CPI y/y 0.40% 0.30%
GBP PPI Input m/m 0.90% 2.60%
GBP RPI y/y 1.40% 1.40%
GBP Core CPI y/y 1.30% 1.20%
GBP PPI Output m/m 0.10% 0.10%
10:00 EUR German ZEW Economic Sentiment 8.2 19.2
EUR ZEW Economic Sentiment 12.3 20.2
13:30 USD Building Permits 1.15m 1.14M
USD Housing Starts 1.17M 1.16M
20-Jul 07:00 EUR German PPI m/m 0.20% 0.40%
09:00 EUR Current Account 24.9B 36.2B
09:30 GBP Average Earnings Index 3m/y 2.30% 2.00%
GBP Claimant Count Change 4.1K -0.4K
GBP Unemployment Rate 5.00% 5.00%
10:00 CHF ZEW Economic Expectations 19.4
15:00 EUR Consumer Confidence -8 -7
21-Jul 05:30 JPY All Industries Activity m/m -1.00% 1.30%
07:00 CHF Trade Balance 3.49B 3.78B
09:30 GBP Retail Sales m/m -0.40% 0.90%
GBP Public Sector Net Borrowing 9.3B 9.1B
12:45 EUR Minimum Bid Rate 0.00% 0.00%
13:30 CAD Wholesale Sales m/m 0.30% 0.10%
EUR ECB Press Conference
USD Philly Fed Manufacturing Index 5.1 4.7
USD Unemployment Claims 271K 254K
14:00 USD HPI m/m 0.40% 0.20%
15:00 USD Existing Home Sales 5.48M 5.53M
USD CB Leading Index m/m 0.20% -0.20%
22-Jul 03:00 JPY Flash Manufacturing PMI 48.3 48.1
08:00 EUR French Flash Manufacturing PMI 48.1 48.3
EUR French Flash Services PMI 49.6 49.9
08:30 EUR German Flash Manufacturing PMI 53.6 54.5
EUR German Flash Services PMI 53.3 53.7
09:00 EUR Flash Manufacturing PMI 52.1 52.8
EUR Flash Services PMI 52.3 52.8
10:00 EUR Italian Retail Sales m/m 0.20% 0.10%
13:30 CAD Core CPI m/m 0.20% 0.30%
CAD Core Retail Sales m/m 0.20% 1.30%
CAD CPI m/m 0.50% 0.40%
CAD Retail Sales m/m 0.00% 0.90%
14:45 USD Flash Manufacturing PMI 51.9 51.3

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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