Weekly Forex Preview: BoE, US retail sales under the scanner

Image via DUP Photos / Flickr. Picture by Kelvin Boyes / Press Eye.

The Australian dollar was the weakest currency last week led by the RBA’s 25bps rate cut and a weak inflation forecast which fueled speculation of another rate cut by August this year. As a result, the AUD fell over 3.11% this week marking the second week of declines and closing at a 9-week low. Commodity-linked currencies were broadly weaker with the CAD and the NZD losing out as well.

The US dollar managed to gain this week, despite starting off on a weak note and the US Dollar Index briefly falling to an 18-month low. By mid-week, the dollar posted a strong recovery while the yen, which also started the week on a stronger note gave back some of its gains.

Fundamentals for the Week 09/05 – 13/05

Date	Time	Currency	Detail	Forecast	Previous
09-May	00:50	JPY	Monetary Policy Meeting Minutes
	01:00	JPY	Average Cash Earnings y/y	0.60%	0.70%
	02:30	AUD	ANZ Job Advertisements m/m		0.20%
	9th-12th	CNY	Foreign Direct Investment ytd/y		4.50%
	06:00	JPY	Consumer Confidence	40.8	41.7
	07:00	EUR	German Factory Orders m/m	0.70%	-1.20%
	08:15	CHF	CPI m/m	0.20%	0.30%
	08:30	GBP	Halifax HPI m/m	0.10%	2.60%
	09:30	EUR	Sentix Investor Confidence	6.1	5.7
	13:15	CAD	Housing Starts	195K	205K
	15:00	USD	Labor Market Conditions Index m/m		-2.1
10-May	00:01	GBP	BRC Retail Sales Monitor y/y		-0.70%
	02:30	CNY	CPI y/y	2.30%	2.30%
		CNY	PPI y/y	-3.80%	-4.30%
	06:45	CHF	Unemployment Rate	3.50%	3.50%
	07:00	EUR	German Industrial Production m/m	-0.20%	-0.50%
		EUR	German Trade Balance	20.4B	19.8B
	07:45	EUR	French Gov Budget Balance		-25.6B
		EUR	French Industrial Production m/m	0.60%	-1.00%
	09:00	EUR	Italian Industrial Production m/m	0.30%	-0.60%
	09:30	GBP	Goods Trade Balance	-11.2B	-12.0B
	11:00	USD	NFIB Small Business Index	93.2	92.6
		USD	Wholesale Inventories m/m	0.20%	-0.50%
	22:00	NZD	RBNZ Financial Stability Report
		NZD	RBNZ Gov Wheeler Speaks
11-May	01:30	AUD	Westpac Consumer Sentiment		-4.00%
	02:10	NZD	RBNZ Gov Wheeler Speaks
	02:30	AUD	Home Loans m/m	-1.40%	1.50%
	06:00	JPY	Leading Indicators	96.40%	96.80%
	09:30	GBP	Manufacturing Production m/m	0.40%	-1.10%
		GBP	Industrial Production m/m	0.70%	-0.30%
	13:45	CAD	Gov Council Member Wilkins Speaks
	15:00	GBP	NIESR GDP Estimate		0.30%
	15:30	USD	Crude Oil Inventories		2.8M
	23:30	NZD	Business NZ Manufacturing Index		54.7
12-May	00:00	AUD	RBA Assist Gov Edey Speaks
	00:01	GBP	RICS House Price Balance	38%	42%
	00:50	JPY	Current Account	1.90T	1.73T
		JPY	BOJ Summary of Opinions
		JPY	Bank Lending y/y		2.00%
	02:00	AUD	MI Inflation Expectations		3.60%
	06:00	JPY	Economy Watchers Sentiment	44.9	45.4
	07:00	EUR	German WPI m/m	0.20%	0.30%
	07:45	EUR	French Final CPI m/m	0.10%	0.10%
	10:00	EUR	Industrial Production m/m	0.10%	-0.80%
	12:00	GBP	BOE Inflation Report
		GBP	MPC Official Bank Rate Votes	0-0-9	0-0-9
		GBP	Monetary Policy Summary
		GBP	Official Bank Rate	0.50%	0.50%
		GBP	Asset Purchase Facility	375B	375B
		GBP	MPC Asset Purchase Facility Votes	0-0-9	0-0-9
	12:45	GBP	BOE Gov Carney Speaks
	13:30	CAD	NHPI m/m	0.30%	0.20%
		USD	Unemployment Claims	277K	274K
		USD	Import Prices m/m	0.60%	0.20%
	16:45	USD	FOMC Member Rosengren Speaks
	18:30	USD	FOMC Member George Speaks
	23:45	NZD	Retail Sales q/q	1.00%	1.20%
		NZD	Core Retail Sales q/q	1.10%	1.40%
13-May	00:50	JPY	M2 Money Stock y/y	3.20%	3.20%
	05:30	JPY	Tertiary Industry Activity m/m	-0.20%	-0.10%
	07:00	EUR	German Prelim GDP q/q	0.60%	0.30%
		EUR	German Final CPI m/m	-0.20%	-0.20%
	07:45	EUR	French Prelim Non-Farm Payrolls q/q	0.20%	0.20%
	09:00	EUR	Italian Prelim GDP q/q	0.30%	0.10%
	09:30	GBP	Construction Output m/m	-2.80%	-0.30%
	10:00	EUR	Flash GDP q/q	0.60%	0.60%
	13:30	USD	Core Retail Sales m/m	0.60%	0.20%
		USD	PPI m/m	0.30%	-0.10%
		USD	Retail Sales m/m	-0.30%	-0.30%
		USD	Core PPI m/m	0.10%	-0.10%
	15:00	USD	Prelim UoM Consumer Sentiment	89.9	89
		USD	Business Inventories m/m	0.20%	-0.10%
		USD	Revised UoM Inflation Expectations		2.80%

Time: GMT+1

Currencies/Events to Watch this Week

AUD: After a busy week and the RBA rate cuts last week the economic calendar from Australia is quiet for the week ahead. Secondary data includes ANZ job advertisements and home loans which is expected to show a -1.40% declines on the month. With the lack of any major fundamentals to go by, the AUD will most likely look to the US fundamentals and data from China over the week.

NZD: The Kiwi is likely to come under pressure this week as RBNZ releases the financial stability report followed by speaking engagements from the RBNZ Governor, Wheeler. On Thursday, quarterly retail sales data is expected to show a slower pace of gains, rising 1.0% for the first quarter, down from 1.20% gains seen in the previous quarter. Core retail sales data from New Zealand is expected to rise 1.10%, less than the previous quarter’s 1.40% increase.

CNY: Data from China the coming week will see the inflation data, which is expected to throw no surprises. Analysts expect to see China’s inflation remain flat, rising 2.30% the same pace as last month. Producer prices are however expected to continue improving, falling 3.80% on the month compared 4.30% declines previously. Industrial production is due on Saturday and is expected to see a soft pace of growth, rising 6.50% from 6.80% previously.

JPY: Following a quiet week long holiday, Japan will be in focus with Monday’s BoJ meeting minutes release from the April meeting. Cash earnings data is expected to show a 0.60% increase less than the previous months 0.70% gains while consumer confidence is expected to slip to 40.8 from 41.7 previously. The BoJ will also be releasing its summary of opinions mid-week.

EUR: From the Eurozone, the focus will be on Germany with factory orders due on Monday. Expectations call for a 0.70% increase following a 1.70% decline previously. Later in the week, German preliminary GDP estimates for the first quarter will be released with expectations of a 0.60% increase, up from 0.30% previously, but inflation is expected to remain weak, falling 0.20% on the month. Eurozone GDP estimates for Q1 is expected to show no change, staying at 0.60% in the first three months of the year.

GBP: A busy week for the UK starts off with manufacturing and industrial production which is expected to see a recovery. Forecasts are for a 0.40% increase in manufacturing production following a 1.10% decline previous while industrial production is expected to rise 0.70% offsetting the 0.30% declines in the previous month. The main event will, however, be the Bank of England monetary policy meeting. Interest rates are expected to remain unchanged, but the BoE could strike a dovish tone in light of the recent weak PMI readings in April.

CAD: A quiet week for the Canadian dollar, housing starts make for the only main release for the whole week, with a forecast of 195k compared to 205k previously. Housing price index data for the month is expected to rise 0.30% in March, up from 0.20% previously.

USD: Data from the US this week will see the retail sales data for March, which is expected to show robust sales, rising 0.60%, up from 0.20% previously, while the retail sales are expected to slip 0.30%, same as in the last month. Producer price index is expected to rise 0.30% following a 0.10% declines in the previous month. FOMC members, Rosengren, and George, are expected to speak during the week.