Weekly Forex Forecast: 11 – 15 May

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The British Pound which opened the weak on an uncertain note due to the UK elections saw a surprise rebound as the UK voters gave the Conservatives Party, led by David Cameron a thumping majority squashing all speculation of a hung parliament. The British Pound saw a strong rally across the board last week making it the strongest currency among its peers.

Weekly Spot FX Performance – 08/05/2015 (Source: Finviz.com)
Weekly Spot FX Performance – 08/05/2015 (Source: Finviz.com)

The Kiwi continued its declines since the past two weeks with the Greenback coming in a second close. Economic data from the US remained mixed and with the recent jobs report for April managing to meet estimates, investors were not too happy however. Prospects of a June rate hike start to fade and the Greenback lost its footing across the board especially as new data showed that the first quarter GDP was most likely going to show a contraction.

Fundamentals for the Week 11 – 15 May

Date Time Currency Detail Forecast Previous
11-May 04:30 AUD NAB Business Confidence 3
09:00 EUR German WPI m/m 0.40% 1.00%
All Day EUR Eurogroup Meetings
14:00 GBP Official Bank Rate 0.50% 0.50%
GBP Asset Purchase Facility 375B 375B
Tentative GBP MPC Rate Statement
17:00 USD Labor Market Conditions Index m/m -0.3
02:01 GBP BRC Retail Sales Monitor y/y 3.20%
04:30 AUD Home Loans m/m 1.10% 1.20%
12-May 12th-15th NZD REINZ HPI m/m 6.70%
06:45 JPY 10-y Bond Auction 0.37|2.7
08:00 JPY Leading Indicators 105.50% 104.80%
12th-16th CNY New Loans 1210B 1180B
12th-16th CNY M2 Money Supply y/y 11.90% 11.60%
11:30 GBP Manufacturing Production m/m 0.30% 0.40%
GBP Industrial Production m/m 0.00% 0.10%
12:30 AUD Annual Budget Release
All Day EUR ECOFIN Meetings
16:00 USD NFIB Small Business Index 95.8 95.2
17:00 GBP NIESR GDP Estimate 0.60%
USD JOLTS Job Openings 5.21M 5.13M
19:45 USD FOMC Member Williams Speaks
21:00 USD Federal Budget Balance 138.0B -52.9B
00:00 NZD RBNZ Financial Stability Report
00:05 NZD RBNZ Gov Wheeler Speaks
13-May 01:45 NZD FPI m/m 0.10%
02:50 JPY Current Account 1.34T 0.60T
JPY Bank Lending y/y 2.60%
04:30 AUD Wage Price Index q/q 0.60% 0.60%
08:00 JPY Economy Watchers Sentiment 52.1 52.2
08:30 CNY Industrial Production y/y 6.10% 5.60%
CNY Fixed Asset Investment ytd/y 13.60% 13.50%
CNY Retail Sales y/y 10.40% 10.20%
EUR French Prelim GDP q/q 0.40% 0.10%
09:00 EUR German Prelim GDP q/q 0.50% 0.70%
EUR German Final CPI m/m -0.10% -0.10%
09:45 EUR French Prelim Non-Farm Payrolls q/q 0.00% 0.00%
EUR French CPI m/m 0.20% 0.70%
11:00 EUR Italian Prelim GDP q/q 0.20% 0.00%
11:30 GBP Average Earnings Index 3m/y 1.70% 1.70%
GBP Claimant Count Change -20.1K -20.7K
GBP Unemployment Rate 5.50% 5.60%
12:00 EUR Flash GDP q/q 0.50% 0.30%
EUR Industrial Production m/m 0.10% 1.10%
12:30 GBP BOE Gov Carney Speaks
GBP BOE Inflation Report
Tentative EUR German 10-y Bond Auction 0.13|1.5
14:30 EUR ECB Monetary Policy Meeting Accounts
15:30 USD Core Retail Sales m/m 0.40% 0.40%
USD Retail Sales m/m 0.30% 0.90%
USD Import Prices m/m 0.30% -0.30%
17:00 USD Business Inventories m/m 0.20% 0.30%
17:30 USD Crude Oil Inventories -3.9M
20:01 USD 10-y Bond Auction 1.93|2.6
01:30 NZD Business NZ Manufacturing Index 54.5
01:45 NZD Retail Sales q/q 1.60% 1.70%
14-May NZD Core Retail Sales q/q 1.50% 1.50%
02:01 GBP RICS House Price Balance 22% 21%
02:50 JPY M2 Money Stock y/y 3.60% 3.60%
06:45 JPY 30-y Bond Auction 1.38|2.9
09:00 JPY Prelim Machine Tool Orders y/y 14.90%
15:30 CAD NHPI m/m 0.30% 0.20%
USD PPI m/m 0.10% 0.20%
USD Unemployment Claims 271K 265K
USD Core PPI m/m 0.10% 0.20%
17:30 CAD BOC Review
USD Natural Gas Storage 76B
20:01 USD 30-y Bond Auction 2.60|2.2
22:45 CAD Gov Council Member Patterson Speaks
02:50 JPY PPI y/y -2.10% 0.70%
15th-19th CNY Foreign Direct Investment ytd/y 10.60%
15-May 08:00 JPY Consumer Confidence 41.9 41.7
10:15 CHF PPI m/m -0.10% 0.20%
11:30 GBP Construction Output m/m 4.10% -0.90%
15:30 CAD Manufacturing Sales m/m 0.30% -1.70%
CAD Foreign Securities Purchases 7.23B 9.27B
USD Empire State Manufacturing Index 5.1 -1.2
16:15 USD Capacity Utilization Rate 78.40% 78.40%
USD Industrial Production m/m 0.10% -0.60%
16:30 GBP CB Leading Index m/m 0.60%
17:00 USD Prelim UoM Consumer Sentiment 96.5 95.9
USD Prelim UoM Inflation Expectations 2.60%
23:00 USD TIC Long-Term Purchases 9.8B

Currencies/Events to Watch this Week

BoE Bank Rate & Jobs Report: After staging a strong rally last week, the British Pound will shift focus on the Central Bank’s interest rate decision this week. Although it is expected to be a non-event, focus will be on the tone of the statement especially given that the election risk is now done with. Markets currently expect a rate hike in early 2016. Later in the week, the UK’s monthly jobs report will also be due with the unemployment rate expected to decline to 5.5%.

Eurozone GDP & CPI: Focus in the Eurozone this week will shift to the flash GDP estimates and the CPI data. So far fundamentals have been mixed from the Eurozone but better than previously thought. Although the Euro is susceptible to the ongoing Greece negotiations, an upbeat fundamentals is likely to keep the Euro stronger across the board.

Kiwi Retail sales: After being subdued and being the weakest currency last week, the Kiwi looks to the retail sales data due this week. However, any upside news is likely to be contained by dovish narrative from RBNZ Governor Wheeler who is expected to deliver a speech ahead of the retail sales data release.

US Retail sales: Economic calendar from the US is light this week with the retail sales being the main focus followed by the Empire State Manufacturing Index and the Preliminary UoM inflation and consumer sentiment expectations. The Greenback has been weaker across the board and the retail sales could give insights into how the first month of the second quarter is shaping out in regards to the Q2 GDP


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