The Week Ahead: The FED, the BoE, Geopolitics and the Stats Are in Focus

On the Macro

For the Dollar:

It’s a big week ahead for the Greenback.

In a quiet start to the week, NY State manufacturing numbers and building permit and house start figures will provide direction on Monday and Tuesday.

While we can expect the markets to be sensitive to the numbers, the focus will be on the FED.

The FOMC economic projections, statement and press conference will drive the Dollar on Wednesday. While the FED is unlikely to move on rates, the economic projections, statement, and press conference will give the markets some idea of the FED’s plans for the remainder of the year.

For now, the markets have priced in a rate cut at the turn of the 3^rd quarter…

Stats through the 2^nd half of the week include the all-important Philly FED manufacturing numbers on Thursday.

Prelim private sector PMI and existing home sales figures round off the week on Friday. While the focus will be on service sector numbers, expect home sales figures and the manufacturing PMI to also impact.

Of less influence on the week will be the weekly jobless claims figures on Thursday, barring a material jump.

The Dollar Spot Index ended the week up 0.58% to $97.572.

For the EUR:

It’s a busier week ahead.

Eurozone wage growth figures will provide the EUR with direction ahead of a busy Tuesday.

German and Eurozone economic sentiment figures are due out on Tuesday alongside the Eurozone’s May inflation and trade figures.

On Thursday, the ECB economic bulletin is due out along with Eurozone consumer confidence figures.

Prelim private PMI numbers, due out on Friday, round off the week.

German economic sentiment and manufacturing PMI numbers and the Eurozone consumer confidence figure will have the greatest impact.

The EUR/USD ended the week down 1.11% to $1.1208.

For the Pound:

It’s also a relatively busy week ahead.

The markets will have to wait until Wednesday for the first set of stats. May inflation figures due out on Wednesday will provide direction mid-week.

On Thursday, retail sales figures are due out ahead of the June BoE monetary policy decision. A recent pickup in retail sales was attributed to hoarding ahead of the previous Brexit deadline. Forecasts are Sterling negative which would suggest that hoarding had in fact contributed.

On the policy front, while the BoE is expected to leave rates unchanged, the markets will be looking for any clues on when the 1^st rate hike will take place, if at all…

At the end of the week, BoE Governor Carney wraps things up on Friday.

The GBP/USD ended the week down 1.16% at $1.2589.

For the Loonie:

It’s a relatively busy week ahead.

May core inflation figures due out on Wednesday and April retail sales figures due out on Friday will have the greatest impact.

Of lesser influence will be foreign securities purchases and manufacturing sales numbers due out on Monday and Tuesday.

Outside of the stats, trade war chatter and crude oil prices will need to be factored in.

The Loonie ended the week down 1.11% to C$1.3414 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week for the Aussie. House price figures due out on Tuesday will likely have a muted impact on the Aussie.

On the policy front, the RBA meeting minutes are also due out on Tuesday and will have an influence.

Outside of the numbers, trade war chatter and the effects of economic data from elsewhere on risk sentiment will also need to be considered.

The Aussie Dollar ended the week down 1.84% at $0.6872.

For the Japanese Yen:

May trade data due out on Wednesday will be watched closely. Forecasts are for particularly dire numbers, which could pressure the BoJ into action.

Thursday’s BoJ monetary policy statement and press conference will give some idea of what’s next to support the economy.

May inflation and manufacturing PMI numbers due out on Friday will unlikely have an impact on the Yen.

Market risk sentiment through the week will remain the key driver for the Yen.

The Japanese Yen ended the week down 0.34% ¥108.56 against the U.S Dollar.

For the Kiwi Dollar:

It’s a relatively busy week ahead.

Consumer sentiment numbers, due out on Tuesday will provide direction early on in the week. 1^st quarter GDP figures due out on Thursday will also have an impact.

The markets will likely brush aside current account numbers due out on Wednesday.

Outside of the stats, expect market sentiment towards global trade to continue to influence.

The Kiwi Dollar ended the week down 2.60% to $0.6492.

Out of China:

There are no material stats due out of China, leaving trade war chatter the key driver in the week. The markets will also be looking out for any further government support measures.

Geo-Politics

Trade Wars:  As the trade war continues, we can expect updates from either side to have a material impact on market risk appetite. The G20 Summit is scheduled to start on 28^th June. The big question will be whether China’s premier Xi will attend and whether the U.S and China can find common ground.

UK Politics: There’ll be plenty of attention placed on the UK Parliament. Through the week a series of ballots will decide the outcome of the Tory Party leadership race.

Iran: It remains to be seen whether last week’s attack on an oil tanker was a one-off. The week ahead could lead to U.S action or, worse yet, more attacks.

The Rest

Monetary Policy:

For the U.S Dollar: While the FED is expected to hold rates steady, will economic growth and inflation numbers be revised downwards again? Also, will the FED come out and point to a September cut or sit on the fence, vis-à-vis interest rates?

For the UK Pound: While the BoE is also expected to hold rates steady, Carney has warned the markets of an aggressive rate path ahead. Will there be any hint of a near-term rate hike or is the BoE on hold until Halloween?

For the Japanese Yen: Economic data due out of Japan ahead of Thursday’s BoJ monetary policy decision could give the BoJ more reason to ease policy further. The press conference will likely reveal all. While the BoJ is unlikely to make a move this week, a dovish FED could give the BoJ an incentive to talk of a near-term move.