FX Week Ahead: UK Retail Sales, FOMC Meeting Minutes, US CPI

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March FOMC Minutes

The US dollar closed the week as the second weakest currency, only next to the British pound. The US dollar fell sharply over the week but managed to recover some ground on late Friday. Data over the week included weak nonfarm productivity data for the second quarter and a flat retail sales print. Despite a weak print, gold prices settled modestly higher, gaining 0.33% for the week after multiple attempts to breakout above $1350 failed.

Weekly Spot FX Performance – 12/08/2016
Weekly Spot FX Performance – 12/08/2016

Although oil prices started off on a weaker note, Oil managed to close higher and thus led the oil related currencies, namely the NOK and CAD to outperform over the week. The Norwegian Krone closed the week with 3.37% gains relative to the US dollar, while the Canadian dollar came in second, rising 1.66%.

Economic Calendar for the Week 15/08 – 19/08

Date Time Currency Event Forecast Previous
15-Aug 00:50 JPY Prelim GDP q/q 0.20% 0.50%
JPY Prelim GDP Price Index y/y 0.70% 0.90%
05:30 JPY Revised Industrial Production m/m 1.90% 1.90%
08:15 CHF PPI m/m -0.20% 0.10%
13:30 USD Empire State Manufacturing Index 2.1 0.6
16-Aug 02:30 AUD Monetary Policy Meeting Minutes
AUD New Motor Vehicle Sales m/m 3.10%
09:30 GBP CPI y/y 0.50% 0.50%
GBP PPI Input m/m 0.60% 1.80%
GBP RPI y/y 1.70% 1.60%
GBP Core CPI y/y 1.30% 1.40%
GBP HPI y/y 8.30% 8.10%
GBP PPI Output m/m 0.30% 0.20%
10:00 EUR German ZEW Economic Sentiment 2.1 -6.8
EUR ZEW Economic Sentiment -6.3 -14.7
EUR Trade Balance 23.2B 24.5B
13:30 CAD Manufacturing Sales m/m 0.80% -1.00%
USD Building Permits 1.16M 1.15M
USD CPI m/m 0.00% 0.20%
USD Core CPI m/m 0.20% 0.20%
USD Housing Starts 1.18M 1.19M
14:15 USD Capacity Utilization Rate 75.70% 75.40%
USD Industrial Production m/m 0.20% 0.60%
23:45 NZD Employment Change q/q 0.60% 1.20%
NZD PPI Input q/q -1.00%
NZD Unemployment Rate 5.30% 5.70%
NZD PPI Output q/q -0.20%
17-Aug 02:30 AUD Wage Price Index q/q 0.50% 0.40%
09:30 GBP Average Earnings Index 3m/y 2.50% 2.30%
GBP Claimant Count Change 5.2K 0.4K
GBP Unemployment Rate 4.90% 4.90%
18:00 USD FOMC Member Bullard Speaks
19:00 USD FOMC Meeting Minutes
18-Aug 00:50 JPY Trade Balance 0.14T 0.33T
02:30 AUD Employment Change 10.2K 7.9K
AUD Unemployment Rate 5.80% 5.80%
09:00 EUR Current Account 27.3B 30.8B
09:30 GBP Retail Sales m/m 0.10% -0.90%
10:00 EUR Final CPI y/y 0.20% 0.20%
EUR Final Core CPI y/y 0.90% 0.90%
12:30 EUR ECB Monetary Policy Meeting Accounts
USD Philly Fed Manufacturing Index 1.4 -2.9
USD Unemployment Claims 269K 266K
15:00 USD CB Leading Index m/m 0.30% 0.30%
15:05 USD FOMC Member Dudley Speaks
19-Aug 05:30 JPY All Industries Activity m/m 0.90% -1.00%
07:00 EUR German PPI m/m 0.10% 0.40%
09:30 GBP Public Sector Net Borrowing -2.3B 7.3B
13:30 CAD Core CPI m/m 0.00% 0.00%
CAD Core Retail Sales m/m 0.40% 0.90%
CAD CPI m/m 0.00% 0.20%
CAD Retail Sales m/m 0.80% 0.20%

Time: GMT+1

Currencies/Events to Watch this Week

AUD: The week ahead will see the release of the RBA’s meeting minutes on Tuesday. The meeting minutes cover the monetary policy meeting from earlier in August where the central bank cut interest rates by 25bps to 1.50%. Economic data is light during the mid-week and then follows the Australian unemployment report. Forecasts point to the unemployment rate staying unchanged at 5.80%, same as the month before in June. The economy is expected to show a net employment change of 9.9k – 10.2k.

NZD: After the RBNZ’s rate cut last week and a better than expected quarterly retail sales report, the week ahead will see the release of New Zealand’s quarterly employment change. Forecasts point to a 0.60% increase, which is slower than the first quarter’s 1.20% increase. New Zealand’s quarterly unemployment rate is also expected to show a decline to 5.30% in the second quarter, down from 5.70% seen in the first quarter.

JPY: Economic data from Japan this coming week will cover the preliminary GDP report for the second quarter. After posting solid gains of 0.50%, Japan’s economy is expected to rise at a slower pace of only 0.30%. The annualized GDP is expected to decline as a result with forecasts estimating an annual GDP growth rate of 0.80%, down from 1.90% in the first quarter. Industrial production and merchandise trade balance data make up for the remainder of the data.

EUR: Data from the Eurozone is fairly quiet this week, with Tuesday’s ZEW economic sentiment being the main release. German ZEW economic sentiment is forecast to rise 2.1 in August, while the Eurozone ZEW economic sentiment is expected to fall 6.30. Eurozone inflation data is also expected this week with estimates pointing to a 0.40% decline in headline CPI on a month over month basis. On a yearly basis, consumer prices are expected to inch higher, rising 0.20%. Later on Thursday, the ECB’s monetary policy meeting accounts will be released, but nothing much is expected following the ECB leaving policy unchanged.

GBP: It could turn out to be a big week for the British pound with the retail sales numbers coming out on Thursday. The retail sales data for July is expected to rise 0.10% excluding auto fuel while the headline retail sales are expected to fall to 4.10% in July compared to 4.30% in June. The retail sales report will be the first official release accounting for a full month after the Brexit vote which could have a potential surprise to the downside. UK inflation data will be on the tap on Tuesday. Headline CPI is expected to rise 0.50%, rising at the same pace as a month before while core CPI is expected the rise to 1.30%, compared to 1.40% year over year growth seen in June.

CAD: Data from Canada this week kicks off with Tuesday’s manufacturing sales report which is expected to show an increase of 0.80% in June following the 1.0% contraction in May. On Friday, inflation data from Canada is expected to show the annual inflation rate unchanged at 1.50%, while the BoC’s core CPI gauge is expected to remain steady at 2.10%. Retail sales numbers are also due on Friday with forecasts pointing to a 0.70% increase on a month over month basis.

USD: A busy week for the US starts on Tuesday with inflation data on the tap. Headline CPI is expected to remain unchanged in July on a month over month basis while rising 1.0% in July, the same pace as in June. Core CPI is expected remain steady at 2.30% on a year over year basis in July. Housing starts, building permits are also out on Tuesday and expected to show a moderate pace of increase in July following a strong pace of growth seen in June. On Wednesday, the FOMC meeting minutes will be the main event to watch out for. Fed members are also lined up this week starting with Lockhart, Bullard, Dudley and Williams speaking throughout the week.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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