Week ahead in FX: ECB meeting, NFP and Australia GDP

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The British pound was the strongest currency last week, rising 0.81% against the US dollar. The Sterling gained as opinion polls suggested that the risks of the UK leaving the EU were ebbing, underlining the fact that the sterling was focusing more on the Brexit risks than the fundamentals. Last week saw the UK’s first quarter GDP coming out unchanged at 0.40% at the second revision. The Canadian dollar was the second best currency pair, rising 0.65%. The Bank of Canada left interest rates unchanged last week. The Loonie was also supported by stronger oil prices.

Weekly Spot FX Performance – 27/05/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 27/05/2016 (Source: Finviz.com)

The NZD and the EUR were the weakest currencies last week, including the AUD. The commodity-linked currencies posted steady declines as gold prices continued to fall for the fourth consecutive week. For the euro, despite an upbeat German GDP data, monetary policy divergence was back pushing the single currency lower.

Fundamentals for the Week 30/05 – 03/06

Date Time Currency Detail Forecast Previous
30-May 00:50 JPY Retail Sales y/y -1.20% -1.00%
01:20 USD FOMC Member Bullard Speaks
02:00 AUD HIA New Home Sales m/m 8.90%
02:30 AUD Company Operating Profits q/q 0.50% -2.80%
07:00 EUR German Import Prices m/m 0.40% 0.70%
All Day EUR German Prelim CPI m/m 0.30% -0.40%
07:45 EUR French Consumer Spending m/m 0.10% 0.20%
08:00 CHF KOF Economic Barometer 102.9 102.7
EUR Spanish Flash CPI y/y -1.00% -1.10%
13:30 CAD Current Account -17.4B -15.4B
CAD RMPI m/m 2.20% 4.50%
CAD IPPI m/m 0.20% -0.60%
23:45 NZD Building Consents m/m -9.80%
31-May 00:30 JPY Household Spending y/y -1.00% -5.30%
JPY Unemployment Rate 3.20% 3.20%
00:50 JPY Prelim Industrial Production m/m -1.40% 3.80%
02:00 NZD ANZ Business Confidence 6.2
02:30 AUD Building Approvals m/m -2.80% 3.70%
AUD Current Account -19.3B -21.1B
AUD Private Sector Credit m/m 0.50% 0.40%
06:00 JPY Housing Starts y/y 3.90% 8.40%
07:00 EUR German Retail Sales m/m 1.10% -1.10%
07:45 EUR French Prelim CPI m/m 0.30% 0.10%
08:55 EUR German Unemployment Change -4K -16K
09:00 EUR M3 Money Supply y/y 5.00% 5.00%
EUR Private Loans y/y 1.50% 1.60%
10:00 EUR CPI Flash Estimate y/y -0.10% -0.20%
EUR Core CPI Flash Estimate y/y 0.80% 0.70%
EUR Italian Prelim CPI m/m 0.20% -0.10%
EUR Unemployment Rate 10.20% 10.20%
13:30 CAD GDP m/m 0.00% -0.10%
USD Core PCE Price Index m/m 0.20% 0.10%
USD Personal Spending m/m 0.60% 0.10%
USD Personal Income m/m 0.40% 0.40%
14:00 USD S&P/CS Composite-20 HPI y/y 5.10% 5.40%
14:45 USD Chicago PMI 50.8 50.4
15:00 USD CB Consumer Confidence 96.1 94.2
23:45 NZD Overseas Trade Index q/q -2.00%
01-Jun 00:01 GBP BRC Shop Price Index y/y -1.70%
00:30 AUD AIG Manufacturing Index 53.4
00:50 JPY Capital Spending q/y 1.90% 8.50%
02:00 CNY Manufacturing PMI 50 50.1
CNY Non-Manufacturing PMI 53.5
02:30 AUD GDP q/q 0.60% 0.60%
02:45 CNY Caixin Manufacturing PMI 49.3 49.4
03:00 JPY Final Manufacturing PMI 47.6 47.6
06:45 CHF GDP q/q 0.30% 0.40%
07:00 GBP Nationwide HPI m/m 0.30% 0.20%
07:30 AUD Commodity Prices y/y -9.40%
08:15 CHF Retail Sales y/y -0.80% -1.30%
EUR Spanish Manufacturing PMI 52.6 53.5
08:30 CHF Manufacturing PMI 54.2 54.7
08:45 EUR Italian Manufacturing PMI 53.5 53.9
08:50 EUR French Final Manufacturing PMI 48.3 48.3
08:55 EUR German Final Manufacturing PMI 52.5 52.4
09:00 EUR Final Manufacturing PMI 51.5 51.5
09:30 GBP Manufacturing PMI 49.6 49.2
GBP Net Lending to Individuals m/m 5.3B 9.3B
GBP M4 Money Supply m/m 0.20% -0.40%
GBP Mortgage Approvals 68K 71K
14:30 CAD RBC Manufacturing PMI 52.2
14:45 USD Final Manufacturing PMI 50.5 50.5
15:00 USD ISM Manufacturing PMI 50.6 50.8
USD Construction Spending m/m 0.50% 0.30%
USD ISM Manufacturing Prices 58 59
All Day USD Total Vehicle Sales 17.2M 17.4M
Tentative NZD GDT Price Index 2.60%
02-Jun 00:50 JPY Monetary Base y/y 27.20% 26.80%
02:30 AUD Retail Sales m/m 0.30% 0.40%
AUD Trade Balance -2.11B -2.16B
06:00 JPY Consumer Confidence 40.4 40.8
08:00 EUR Spanish Unemployment Change -110.0K -83.6K
09:30 GBP Construction PMI 52.1 52
10:00 EUR PPI m/m 0.10% 0.30%
All Day ALL OPEC Meetings
12:45 EUR Minimum Bid Rate 0.00% 0.00%
13:15 USD ADP Non-Farm Employment Change 179K 156K
13:30 EUR ECB Press Conference
USD Unemployment Claims 271K 268K
13:35 USD FOMC Member Powell Speaks
16:00 USD Crude Oil Inventories -4.2M
03-Jun 01:00 JPY Average Cash Earnings y/y 0.90% 1.50%
02:00 NZD ANZ Commodity Prices m/m -0.80%
02:45 CNY Caixin Services PMI 52 51.8
08:15 EUR Spanish Services PMI 55.6 55.1
08:45 EUR Italian Services PMI 52.3 52.1
08:50 EUR French Final Services PMI 51.8 51.8
08:55 EUR German Final Services PMI 55.2 55.2
09:00 EUR Final Services PMI 53.1 53.1
09:30 GBP Services PMI 52.3 52.3
10:00 EUR Retail Sales m/m 0.40% -0.50%
13:30 CAD Trade Balance -2.6B -3.4B
CAD Labor Productivity q/q 0.10%
USD Average Hourly Earnings m/m 0.20% 0.30%
USD Non-Farm Employment Change 160K 160K
USD Unemployment Rate 4.90% 5.00%
USD Trade Balance -41.9B -40.4B
14:45 USD Final Services PMI 51.2 51.2
15:00 USD ISM Non-Manufacturing PMI 55.4 55.7
USD Factory Orders m/m 0.90% 1.10%

Time: GMT+1

Currencies/Events to Watch this Week

AUD: The first quarter GDP data will be the main event to watch for and one which could shift the tide in the AUD’s declines. Economists are looking at 0.60% quarter over quarter growth, same as the previous quarter. On a yearly basis, Australia’s GDP is expected to rise at a slower pace of 2.70% compared the 3.0% annualized GDP growth seen in the previous quarter. A weaker print could likely spur more AUD bears to keep the selling pressure on the Aussie. On Thursday, retail sales numbers will be out and is expected to show a modest increase of 0.30%, down from 0.40% increase seen in March.

NZD: Economic data from New Zealand this week is fairly limited. Building consents are due on Monday while overseas trade index is expected on Tuesday, for the first quarter. The bi-weekly GDT price index is expected on Wednesday with the previous print showing an increase to 2.60% reversing the previous print of 1.40% decline.

JPY: It is likely to be a slow week for the yen next week with the unemployment rate coming out on Monday. Expectations show an unchanged print of 3.20%. Industrial production data is due later and is forecasted to decline 1.50%, down from March’s 3.80% on a monthly basis while on a year over year basis, Japan’s industrial production is expected to fall 5.20%, which is one of the strongest yearly declines since 2014. Later in the week, manufacturing PMI is due followed up by BoJ’s board member, Sato’s speech.

CNY: From China, the markets will be looking to the manufacturing and services PMI this week. Manufacturing PMI is expected to slip to 50.0 in May, which could erase the gains made since March’s increase to 50.2. The Caixin manufacturing PMI is expected to show a contraction with estimates pointing to a slowdown to 49.2 in May from 49.4 in April. On the services side, the Caixin services PMI is expected to rise to 52.0 from 51.8 in April.

EUR: Data from the Eurozone this week will start with inflation estimates. Forecasts are for confirmation that the Eurozone economy slipped into deflation in May, with CPI expected to fall 0.10% on a year over year basis in May. The core CPI, on the other hand, is expected to be steady at 0.70%. The ECB will be meeting next week on June 2nd for its monetary policy meeting. No changes are expected at this event. On Friday, retail sales numbers are expected to show a potential rebound, with sales expected to rise 0.20% in April, after falling 0.50% in March.

CHF: Data from Switzerland this week will include the quarterly GDP report. Estimates point to a 0.20% quarterly increase in GDP in the first quarter of 2016. This is slower than the 0.40% quarterly GDP growth seen in Q4 2015. On an annualized basis, however, Swiss GDP is expected to expand 0.90%, up from 0.40% in the previous quarter.

GBP: From the UK PMI data will be in focus. Manufacturing PMI is expected to moderate with estimates pointing to increase to 49.6 in May, up from 49.2 in April. Construction and services PMI are expected to tick modestly higher.

CAD: From Canada, the markets will be looking to the monthly GDP numbers. Expectations call for a no change to the GDP in March, which follows February’s 0.10% declines. On a quarterly basis, the annualized GDP is expected to rise 2.80%, up from 0.80% in the previous quarter.

USD: A busy week for the US after the markets re-opens on Monday. The PCE price index is expected to rise 1.10%, posting a strong rebound from 0.80% increase seen in March. The Core PCE Price index is expected to rise 1.60% on a year over year basis. On Wednesday, the ISM manufacturing index will be in focus with expectations showing a soft decline to 50.5 in May, from 50.8 in April, while ISM prices paid is expected to slip to 58 from 59.0 in April. Thursday will see the private payrolls report from ADP, which is expected to show a 178k increase in May, up from 156k jobs in April. The ADP report will set the stage for the monthly NFP data on Friday. The US unemployment rate is expected to fall to 4.90%, from 5.0% while the monthly nonfarm payrolls are expected to show 160k jobs being added to the economy.


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