Forex Market Outlook For The Week June 17 – 21, 2019

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The relief offered by trade wars could not boost the markets last week because of worries about another flare-up. The U.S. dollar bagged some handsome gains in a busy week and amid intensifying trade tensions and mixed U.S. economic data. While retail sales beat expectations, inflation missed projections. In the U.K., Boris Johnson is slowly emerging as the Prime Ministerial candidate following the resignation of Theresa May and the first round of votes. Oil prices rose but declined after oil tankers faced attacks at the Gulf of Oman.

The critical U.S. data has already come out and it is time the Fed laid out its plans as regards an interest rate cut. In addition to the Federal Reserve, the Bank of Japan and Bank of England are scheduled to announce interest rates in the upcoming week. Here is an outlook on a few key releases from around the world:

#1: Euro Area ECB President Mario Draghi Speaks (06/17/2019 Monday 17:00 GMT)

forex market outlookMario Draghi, President of the European Central Bank, is scheduled to deliver the opening remarks at the ECB Forum meeting on Central Banking to be held in Portugal. Markets often turn volatile during his speeches as traders make attempt to understand the direction of interest rates in the future.

#2: Australia Monetary Policy Meeting Minutes (06/18/2019 Tuesday 01:30 GMT)

The Reserve Bank of Australia releases the Monetary Policy Meeting Minutes 11 times in a year two weeks after the announcement of the Cash Rate. It provides a detailed account of the Board’s most recent meeting and in-depth insights into the economic conditions that impacted their decision on setting interest rates.

#3: Euro Area ECB President Draghi Speaks (06/18/2019 08:00 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to speak at the ECB Forum meeting on Central Banking to be held in Portugal. Markets often turn volatile during his speeches as traders make attempt to understand the direction of interest rates in the future.

#4: U.K. BoE Governor Mark Carney Speaks (06/18/2019 Tuesday 14:00 GMT)

Mark Carney, Governor of the Bank of England, is scheduled to take part in a panel discussion at the ECB Forum meeting on Central Banking to be held in Portugal. Markets often turn volatile during his speeches as traders make attempt to understand the direction of interest rates in the future.

#5: U.K. CPI (06/19/2019 Wednesday 08:30 GMT)

In the United Kingdom, the annual inflation rate rose to 2.1 percent in the month of April from 1.9 percent in the prior month. However, the reading for April came in below analysts’ expectations of 2.2 percent. This is the highest inflation rate in as many as four months and it was boosted mainly by an increase in energy bills after the energy regulator in the U.K. raised the energy providers’ price cap by 10 percent. Forecast for May 2019: 2.0 percent

#6: Canada CPI (06/19/2019 Wednesday 12:30 GMT)

In Canada, the Consumer Price Index rose by 0.40 percent on a month-on-month basis in April. Forecast for May 2019: an increase of 0.1 percent is on the cards

#7: Euro Area ECB President Draghi Speaks (06/19/2019 Wednesday 14:00 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to deliver the closing remarks at the ECB Forum meeting on Central Banking to be held in Portugal. Markets often turn volatile during his speeches as traders make attempt to understand the direction of interest rates in the future.

#8: U.S. FOMC Economic Projections (06/19/2019 Wednesday 18:00 GMT)

The U.S. FOMC releases the economic projection report four times every year. This report contains the FOMC’s inflation and economic growth projection for the next two years. More importantly, it provides a breakdown of the interest rate forecasts of individual FOMC members.

#9: U.S. FOMC Statement (06/19/2019 Wednesday 18:00 GMT)

The U.S. FOMC releases the Statement eight times in a year. It usually changes the statement a little bit at each release. Traders focus on these changes as the FOMC uses it as a tool to communicate with them as regards monetary policy. In addition to containing the outcome of members’ vote on setting interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes;

#10: U.S. Federal Funds Rate (06/19/2019 Wednesday 18:00 GMT)

In the meeting held in May, the Federal Reserve decided to keep the federal funds rate target range at the current level of 2.25 percent to 2.50 percent. The central bank said that there has been a solid increase in economic activity and that the labor market has remained strong. In addition, the policymakers reaffirmed its resolve to remain as regards further firming up of the monetary policy. Forecast for June 2019: 2.25 percent to 2.50 percent

#11: U.S. FOMC Press Conference (06/19/2019 Wednesday 18:30 GMT)

Jerome Powell, Federal Reserve Chair, holds a press conference after the announcement of the Federal Funds Rate. The press conference which lasts for about an hour has two parts. The first part consists of reading a prepared statement. In the second party, he answers questions posed by the press. As the questions can lead to unscripted answers, heavy market volatility can be expected as traders and investors look out for clues on future decisions.

#12: New Zealand GDP (06/19/2019 Wednesday 22:45 GMT)

New Zealand’s GDP advanced 0.6 percent in the final quarter of last year, following the 0.3 percent growth in the prior period. The reading for the current period matched with analysts’ expectations. The growth in the services sector was driven by retail trade and accommodation, transport, real estate, public administration, and information and communication. Further, industrial activities increased boosted by construction. However, the primary sector contracted.

#13: Australia RBA Governor Philip Lowe Speaks (06/20/2019 Thursday 01:15 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to speak on the topic “The labor markets and spare capacity” in Adelaide at the luncheon of the Committee for the Economic Development of Australia. Audience questions expected. Markets often turn volatile during his speeches as traders make attempt to understand the direction of interest rates in the future.

#14: Japan BoJ Monetary Policy Statement (06/20/2019 Thursday 3:00 GMT)

The Bank of Japan uses the Monetary Policy Report as a tool for communicating with investors as regards the monetary policy decisions. In addition to providing the outcome of the members’ decision on asset purchases, it gives a commentary as regards the economic conditions that impacted their decision. More importantly, the Monetary Policy Statement projects the country’s economic outlook and offers clues on future decisions.

#15: Japan BoJ Press Conference (06/20/2019 Thursday 3:30 GMT)

The Bank of Japan holds a press conference after the announcement of the interest rates. The central bank uses it as a tool for communicating with investors as regarding the monetary policy. In the press conference, the factors that impacted the decision of the members in the most recent meeting, the country’s overall economic outlook, and the inflation situation will be discussed. Investors and traders look out for clues on future monetary policy decisions.

#16: U.K. Retail Sales (06/20/2019 Thursday 08:30 GMT)

In the U.K., retail trade remained unchanged in April after the reading for the prior month was revised upward to represent a gain of 1.2 percent. The reading for the month came in above analysts’ expectations for a decline of 0.3 percent. The increase in sales in clothing, fuel, and non-store retailing was offset by declines in all other key sectors. The largest negative contribution was from non-food stores. Forecast for May 2019: -0.5 percent

#17: U.K. MPC Official Bank Rate Votes and Official Bank Rate (06/20/2019 Thursday 11:00 GMT)

The Monetary Policy Committee of the Bank of England voted unanimously (0-0-9) to maintain the Bank Rate at the current level of 0.75 percent during the meeting in May. Policymakers reaffirmed their pledge to gradually raise the interest rate in a limited manner over the forecast period in spite of the slowdown in global growth and uncertainties related to Brexit. Forecast for June 2019: 0.75 percent

#18: U.K. Monetary Policy Summary (06/20/2019 Thursday 11:00 GMT)

The Bank of England uses the Monetary Policy Summary report as a tool to communicate with investors as regards the monetary policy. It provides the outcome of members’ vote on interest rates and many other policy measures. In addition, it provides a commentary on the economic conditions that impacted their votes. More importantly, it provides an economic outlook as well as clues on future votes.

#19: U.K. BoE Governor Mark Carney Speaks (06/20/2019 Thursday 20:00 GMT)

Mark Carney, Governor of the Bank of England, is scheduled to speak in London at the Mansion House dinner. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#20: France Flash Services PMI (06/21/2019 Friday 07:15 GMT)

In France, the IHS Markit Services PMI rose to the 51.5 level in May from 50.5 in the prior month. However, the reading came in slightly below the preliminary reading of 51.7 but pointed towards the fastest expansion in the services sector ever since November supported by a strong increase in new order receipts. Moreover, employment grew was the highest rate in six months. Input inflation accelerated but output prices remained broadly unchanged. Service providers continued to maintain their optimism as regards the future output and increased demand. In April, the degree of confidence remained weaker. Forecast for June 2019: 51.6

#21: Germany Flash Manufacturing PMI (06/21/2019 Friday 07:30 GMT)

In Germany, the Manufacturing PMI came in at 44.3 in the month of May, little changed from the reading of 44.4 in the prior month. The reading for the month pointed towards a contraction in the manufacturing sector for the fifth month because of a continued decline in new orders and a slowdown in car sales, the US-China trade war, and customers destocking on sales. Further, the job losses accelerated to the fastest rate ever since January 2013. Forecast for June 2019: 44.6

#22: Germany Flash Services PMI (06/21/2019 Friday 07:30 GMT)

In Germany, the IHS Markit Services PMI was revised upward to the 55.4 level in May from the preliminary estimated figure of 55.0. The reading, however, pointed to an expansion in the services sector but at a slower pace. However, the reading came in above the historical average because of an increase in business activity across all the six subsectors. Growth in new business eased to the lowest level in three months. Further, the rate of job creation slowed. However, it remained at the highest level ever since the start of the survey. Meanwhile, work backlogs increased for the fourth month in a row at a steeper rate compared to April. Input cost inflation dropped to the second-lowest level in the last 12 months, while output price inflation eased to a level that is close to a one-and-a-half year low. Optimism moderated as business confidence declined for the third month in a row to the second lowest level ever since August 2016 because of heightened slowdown concerns. Forecast for June 2019: 55.3

#23: Canada Core Retail Sales (06/21/2019 Friday 12:30 GMT)

In Canada, core retail sales (Excluding Autos) jumped to the 1.70 percent level in March from the 0.70 percent level reported for February. Forecast for April 2019: an increase of 0.6 percent is on the cards.

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