Forex Trading Week Ahead

UK GDP & Canada Jobs Report

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The week ahead is expected to start somewhat slower compared to the previous week, as data on the economic calendar is rather limited.

The RBNZ’s monetary policy meeting is due this week, which is likely to gather attention amid lack of any other fundamentals to fall back on. No changes are expected to the overnight cash rate, but investors will be closely watching the RBNZ for any clues on further developments.

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The Inflation Outlook report from New Zealand is also due to be released ahead of the RBNZ’s meeting. Elsewhere, a somewhat busy week is in store for the British Pound. Following the BoE’s rate hike last week, investors’ focus turns to the UK’s GDP, Industrial and Manufacturing reports. The preliminary quarterly GDP report is due on Friday.

Economists forecast a rebound in the UK’s economic growth, with the second quarter GDP expected to rise 0.4%. The industrial and manufacturing production figures are also scheduled to be released later the same day. Friday also sees the release of Canada’s job report. 

Here’s a quick recap of the economic events for the week ahead.

UK Economic Growth Forecast to Rebound in Q2

After the Bank of England (BoE) hiked interest rates by .25 basis points last week, investors will turn to the second quarter data this week. On Friday, the UK’s preliminary GDP figures for the periods of April through June 2018 will be released. Economists forecast that the quarterly GDP grew at a pace of 0.4% in the three months ending June.

This marks a rebound from the first quarter, where the UK’s economy grew at a revised yet sluggish pace of 0.2%. Growth in the first quarter disappointed and had held back BoE officials from hiking interest rates.

UK Gross Domestic Product BoE

On an annualized basis, the UK’s GDP is forecast to rise 1.3% on the year in June. This marks a modest increase from the 1.2% annualized GDP growth rate registered in the first quarter. The UK will also be releasing its newly formed monthly GDP report as well.

Besides the GDP figures, the monthly industrial, manufacturing and construction output figures are also expected to come out during the day. Activity across the three sectors remained mixed for the most part in the month before.

A turn-around in activity could potentially reinforce expectations and further validate the pace of GDP growth that will be released during the day.

RBNZ to Remain on the Sidelines

The Reserve Bank of New Zealand will meet this week following the release of the inflation outlook report. The report is likely to outline the central bank’s views on consumer prices and along with inflation forecasts.

The inflation outlook report could potentially signal what is in store during the RBNZ’s monetary policy meeting. The overnight index swap markets show no changes to the RBNZ’s overnight cash rate which is expected to be steady at 1.75%.

The RBNZ has held interest rates unchanged since November 2016. The recent quarterly employment report is also unlikely to change this outlook, with inflation stubbornly staying below the RBNZ’s inflation target band of 1% – 3%. With the employment factor also being added to the RBNZ mandate, investors will be looking for more details.

The RBNZ had until now, been focusing only on achieving price stability. However, this changed after the newly formed government mandated that employment will also be included in the RBNZ’s policies. The central bank joins the ranks of its counterparts elsewhere in pursuing a dual mandate of full employment and price stability.

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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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