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

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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.

Weekly Spot FX Performance – 06/05/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 06/05/2016 (Source: Finviz.com)

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.

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