Weekly Forex Forecast: 25 – 29 May

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The US Dollar came out tops last week staging one of the strongest comebacks after declining since late March. Boosted by stronger than expected housing data, the FOMC meeting minutes which was a non-event and a hawkish than expected speech by Janet Yellen late on Friday helped the Greenback to reverse from the lows. CPI data released on Friday also saw the core inflation rise 1.8% on an annualized basis reiterating the fact that the Fed would continue looking at the economic data before deciding when to hike the US Federal Funds benchmark rates.

Weekly Spot FX Performance – 22/05/2015 (Source: Finviz.com)
Weekly Spot FX Performance – 22/05/2015 (Source: Finviz.com)

The British Pound and the Euro were the weakest currencies last week as the ECB officials elaborated on their QE plans for the next couple of months while the Pound Sterling succumbed to speeches from various BoE officials. A better than expected retail sales which saw the Pound Sterling rally across the board failed to keep the currency supported as the BoE officials took turns on Friday

Fundamentals for the Week 25 – 29 May

Date Time Currency Detail Expected Previous
25-May 02:50 JPY Trade Balance -0.38T 0.00T
08:00 JPY BOJ Monthly Report
18:00 USD FOMC Member Fischer Speaks
26-May 01:45 NZD Trade Balance 105M 631M
02:50 JPY SPPI y/y 0.60% 3.20%
10:15 CHF Employment Level 4.21M 4.23M
13:00 GBP CBI Realized Sales 19 12
15:30 USD Core Durable Goods Orders m/m 0.50% 0.30%
USD Durable Goods Orders m/m -0.40% 4.70%
16:00 USD HPI m/m 0.70% 0.70%
USD S&P/CS Composite-20 HPI y/y 4.60% 5.00%
16:45 USD Flash Services PMI 57 57.4
17:00 USD CB Consumer Confidence 95.3 95.2
USD New Home Sales 501K 481K
USD Richmond Manufacturing Index 0 -3
19:30 USD FOMC Member Fischer Speaks
27-May 02:50 JPY Monetary Policy Meeting Minutes
03:10 USD FOMC Member Lacker Speaks
03:30 AUD MI Leading Index m/m -0.30%
03:45 AUD RBA Deputy Gov Lowe Speaks
04:30 AUD Construction Work Done q/q -1.40% -0.20%
09:00 CHF UBS Consumption Indicator 1.35
EUR GfK German Consumer Climate 10 10.1
27th-3rd GBP Nationwide HPI m/m 1.00%
Day 1 ALL G7 Meetings
13:00 EUR ECB Financial Stability Report
Tentative EUR German 30-y Bond Auction 1.07|1.3
16:00 EUR Belgian NBB Business Climate -5.7 -6.2
17:00 CAD BOC Rate Statement
CAD Overnight Rate 0.75% 0.75%
28-May 02:50 JPY Retail Sales y/y 5.90% -9.70%
04:30 AUD Private Capital Expenditure q/q -2.30% -2.20%
09:00 CHF Trade Balance 2.77B 2.52B
EUR German Import Prices m/m 0.50% 1.00%
09:20 USD FOMC Member Williams Speaks
11:30 GBP Second Estimate GDP q/q 0.40% 0.30%
GBP Prelim Business Investment q/q 1.10% -0.90%
GBP BBA Mortgage Approvals 39.2K 38.8K
GBP Index of Services 3m/3m 0.50% 0.70%
Tentative EUR Italian 10-y Bond Auction 1.40|1.6
Day 2 ALL G7 Meetings
15:30 CAD Current Account -13.9B
CAD RMPI m/m -0.90%
CAD IPPI m/m 0.30%
USD Unemployment Claims 272K 274K
17:00 USD Pending Home Sales m/m 0.80% 1.10%
17:30 USD Natural Gas Storage 92B
18:00 USD Crude Oil Inventories -2.7M
29-May 01:45 NZD Building Consents m/m 11.00%
02:05 GBP GfK Consumer Confidence 4 4
02:30 JPY Household Spending y/y 3.10% -10.60%
JPY Tokyo Core CPI y/y 0.20% 0.40%
JPY National Core CPI y/y 0.20% 2.20%
JPY Unemployment Rate 3.40% 3.40%
02:50 JPY Prelim Industrial Production m/m 1.10% -0.80%
04:00 AUD HIA New Home Sales m/m 4.40%
NZD ANZ Business Confidence 30.2
04:30 AUD Private Sector Credit m/m 0.50% 0.50%
08:00 JPY Housing Starts y/y 0.10% 0.70%
08:45 CHF GDP q/q 0.00% 0.60%
09:00 EUR German Retail Sales m/m
09:45 EUR French Consumer Spending m/m 0.40% -0.60%
10:00 CHF KOF Economic Barometer 90.3 89.5
EUR Spanish Flash CPI y/y -0.50% -0.60%
11:00 EUR M3 Money Supply y/y 4.90% 4.60%
EUR Private Loans y/y 0.40% 0.10%
12:00 EUR Italian Prelim CPI m/m 0.10% 0.30%
Day 3 ALL G7 Meetings
15:30 CAD GDP m/m 0.20% 0.00%
USD Prelim GDP q/q -0.90% 0.20%
USD Prelim GDP Price Index q/q -0.10% -0.10%
16:45 USD Chicago PMI 53.1 52.3
17:00 USD Revised UoM Consumer Sentiment 90 88.6
USD Revised UoM Inflation Expectations 2.90%

Currencies/Events to Watch this Week

BoC Rate Statement & GDP: The Bank of Canada will hold its monthly monetary policy meeting on the 27th of May with the consensus expecting that the Canadian Central Bank will not change the interest rates. However, BoC Governor Poloz is expected to be dovish on the economy. On the 29th May, the Canadian monthly GDP is expected to rise 0.2% for the month of April. The Canadian dollar lost ground to the Greenback last week despite a strong rally in Crude Oil prices. Recent inflation data from the country was also weak and this is expected to play into the BoC’s dovish view at its rate statement.

Slow week for the Euro: This week there is not much of economic data scheduled from Europe and the markets will see a short week due to a bank holiday on Monday in some of the major European economies. Focus could likely shift to Greece among other things.

UK GDP second estimates: After falling short of expectations during the first estimate, markets will be looking to the second GDP estimates for the first quarter with expectations of a rise to 0.4% from 0.3% first estimates. A modest pickup in the revised GDP should be able to boost the Pound Sterling. The UK is also closed on Monday.

Busy week for the Yen: Data from Japan this week includes retail sales and national Core CPI and unemployment rate, all of which could provide investors with enough data that could be taken into consideration during the next BoJ’s monetary policy meeting. So far, the Japanese Central Bank has remained optimistic that the inflation target og 2% will be reached and in this regards, the retail sales data and the national core CPI could offer early hints into the larger inflation puzzle.

US Revised GDP: Markets head into a new week with the US second revised GDP on investor’s minds. It is largely expected that we could see a downward revised GDP heading into a contraction, which if true could spell one of the weakest quarterly GDP growth in recent years. Besides the GDP data due late in the week on Friday, Core durable goods orders and Fed speak will keep the markets busy. The US markets will be closed on Monday.

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