Forex Market Outlook For The Week June 15 – 19, 2020

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Currencies finished last week with some handsome gains, rebounding from the extensive losses registered earlier in the week as consumer confidence rose in June, according to the University of Michigan’s report. However, the gains were limited by concerns about a second coronavirus wave. The Canadian and Australian dollars gained the most and was followed by the New Zealand dollar. The Pound lost ground after the UK data missed analysts’ expectations. The euro got a boost after Eurozone’s industrial production beat expectations.

In the upcoming week, interest rate decisions from Japan, United Kingdom, and Switzerland; unemployment rate from Australia; claimant count change from the UK; retail sales data from the US; and GDP growth rate from New Zealand stand out. Having said that here is an outlook on some of the key releases from around the world:

#1: Japan BoJ Monetary Policy Statement (06/16/2020 Tuesday 03:00 GMT)

forex market outlookThe Bank of Japan releases the Monetary Policy Statement eight times in a year. The central bank uses the Interest Rate Statement as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ decisions on asset purchases and also offers commentary on the economic conditions that impacted their interest decisions. More importantly, the report projects the nation’s economic outlook and provides clues on future decisions.

#2: United Kingdom Claimant Count Change (06/16/2020 Tuesday 06:00 GMT)

In the United Kingdom, the number of individuals claiming jobless benefits increased by 856,500 to over 2.097 million in April after the figure for the previous month was revised downward to an increase of 12,100. The reading for the month came in above analysts’ expectations for an increase of 676,500. The record monthly increase in jobless claims was attributed to the coronavirus related lockdown measures and closure of businesses from March 23rd. The figures, however, do not include employees asked to go on temporary leave by employers. The government pays 80 percent of the wages to such employees.

#3: United States Retail Sales (06/16/2020 Tuesday 12:30 GMT)

In the United States, retail trade plunged 16.4 percent on a month-on-month basis in April, worse than analysts’ expectations for a 12.0 percent drop. The sharpest decline in retail trade was attributed to the Covid-19 pandemic which forced people to stay put at home and most businesses to close. Clothing and accessories, electronics and appliances, and furniture experienced the biggest declines. Gasoline stations saw a decline in sales after oil prices became negative for the very first time in April. Sales dropped at food and beverage stores and food services as well as drinking places.

Forecast for May 2020: a 7.4 percent increase is expected

#4: United States Core Retail Sales (06/16/2020 Tuesday 12:30 GMT)

In the United States, retail trade excluding autos fell 17.20 percent on a month-over-month basis in April. The reading for the month was much worse than analysts’ expectations for an 8.6 percent drop. The record decline in retail trade was due to the restrictive measures adopted following the coronavirus pandemic.

Forecast for May 2020: an increase of 5.5 percent is on the cards

#5: United States Fed Chair Powell Testifies (06/16/2020 Tuesday 14:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify before the Senate Banking Committee in Washington DC on the Semiannual Monetary Policy Report. There are two parts to the testimony. In the first part, he reads out a prepared statement. The second part is answering questions posed by the committee members. As the questions are not revealed beforehand, heavy market volatility can be expected.

#6: Canada CPI (06/17/2020 Wednesday 12:30 GMT)

In Canada, the Consumer Price Index (CPI) declined 0.70 percent on a month-on-month basis in April.

Forecast for May 2020: an increase of 0.8 percent is expected

#7: United States Fed Chair Powell Testifies (06/17/2020 Wednesday 14:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify before the House Financial Services Committee in Washington DC on the Semiannual Monetary Policy Report. There are two parts to the testimony. In the first part, he reads out a prepared statement. The second part is answering questions posed by the committee members. As the questions are not revealed beforehand, heavy market volatility can be expected.

#8: New Zealand GDP (06/17/2020 Wednesday 22:45 GMT)

New Zealand’s GDP grew 0.5 percent on a quarter-on-quarter basis in the last quarter of 2019 after the growth rate for the previous quarter was revised upward to an increase of 0.8 percent. The growth rate for the quarter matched with analysts’ expectations. The growth was impacted mainly by declines in sectors such as agriculture, construction, forestry and fishing, manufacturing, and wholesale trade. On the other hand, utilities and the services sector as a whole registered expansion. The services sector was boosted by the growth in transport, rental and real estate, and public administration departments. On a yearly basis, economic activity increased 1.8 percent after the 2.3 percent expansion in the previous period.

Forecast for the first quarter of 2020: the economy is expected to decline by 1.0 percent

#9: Australia Employment Change (06/18/2020 Thursday 01:30 GMT)

In April, Australia shed as many as 594,300 jobs, recording the largest monthly decline ever after the reading for the prior period was revised downward to an addition of 700 jobs. The reading for the month came in much worse than analysts’ expectations for a decline of 575,000 jobs. The decline in employment was due to lockdowns and business closures because of the coronavirus pandemic.

Forecast for May 2020: Australia is expected to shed 75,000 jobs

#10: Australia Unemployment Rate Change (06/18/2020 Thursday 01:30 GMT)

In Australia, the unemployment rate zoomed to 6.2 percent in April on a seasonally adjusted basis. In March, unemployed came in at the 5.2 percent level. However, the reading for the month was below analysts’ expectations of 8.3 percent. This is the highest unemployment rate ever since September 2015 and was attributed to lockdowns and business closures due to the Covid-19 pandemic. The number of jobless people in the country rose by 104,500 to 823,300. While people looking for full-time jobs rose 115,000 to 622,300, those looking for part-time employment fell 10,600 to 200,900. Full-time employment declined by 220,500 and part-time employment fell 373,800. The participation rate dropped to a more than 15-year low of 63.5 percent.

Forecast for May 2020: 7.0 percent

#11: Switzerland SNB Monetary Policy Assessment (06/18/2020 Thursday 07:30 GMT)

The Swiss National Bank releases the Monetary Policy Assessment report on a quarterly basis. The central bank uses the interest rate statement as a tool for communicating with investors as regards the monetary policy. It provides the outcome of the members’ decision on setting interest rates and commentary on the economic conditions that impacted their decision. More importantly, it projects the nation’s economic outlook and provides clues on future decisions.

#12: Switzerland SNB Press Conference (06/18/2020 Thursday 07:30 GMT)

The Chairman and Governing Board Members of the Swiss National Bank hold two press conferences every year after the announcement of the interest rates in June and December. The press conference which lasts for about an hour has two parts. In the first part, they read out prepared statements. The second part is answering questions posed by the press. As the questions often lead to unscripted answers, heavy market volatility can be expected.

#13: United Kingdom Asset Purchase Facility (06/18/2020 Thursday 11:00 GMT)

In the United Kingdom, the monetary policy committee members of the Bank of England decided to leave the bond-buying program unchanged at £645 billion during the meeting held in May.

Forecast for June 2020: £745 billion

#14: United Kingdom MPC Asset Purchase Facility Votes (06/18/2020 Thursday 11:00 GMT)

In the United Kingdom, the monetary policy committee members of the Bank of England voted 2-0-7 to maintain the asset purchase facility at £645 billion during the meeting held in May.

Forecast for June 2020: Members are expected to vote 0-9-0 to increase the asset purchase facility to £745 billion

#15: United Kingdom MPC Official Bank Rate Votes (06/18/2020 Thursday 11:00 GMT)

In the United Kingdom, the members of the Bank of England voted unanimously (0-0-9) to maintain the official bank rate at the record low level of 0.1 percent during the meeting held on May 7, 2020. This was in line with analysts’ expectations.

Forecast for June 2020: 0-0-9

#16: United Kingdom Monetary Policy Summary Report (06/18/2020 Thursday 11:00 GMT)

The Bank of England releases the Monetary Policy Summary Report on a monthly basis. The central bank uses the report as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ decisions on interest rates and the policy measures adopted by them. It also provides a commentary on the economic conditions that impacted their votes. More importantly, it discusses the nation’s economic outlook and provides clues on future outcomes.

#17: United Kingdom Official Bank Rate (06/18/2020 Thursday 11:00 GMT)

The members of the monetary policy committee of the Bank of England voted unanimously to leave the key bank rate unchanged at the record low level of 0.1 percent in the meeting held in May. This was very much in line with analysts’ expectations. The central bank anticipates the GDP to contract by 14 percent in 2020 because of the impact of the coronavirus pandemic. Further, the inflation rate is expected to fall to the 0.6 percent level and unemployment is likely to rise to 8 percent.

Forecast for June 2020: 0.1 percent

#18: Canada Core Retail Sales (06/19/2020 Friday 12:30 GMT)

In Canada, retail sales excluding autos declined to the -0.40 percent level in March from the 0.10 percent level in February.

Forecast for April 2020: -7.3 percent

#19: United States Fed Chair Powell Speaks (06/19/2020 Friday 17:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to participate in a virtual panel discussion, along with Loretta Mester, President of the Federal Reserve Bank of Cleveland, in Ohio on building a resilient workforce during the COVID-19 era at a Youngstown community event. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

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