In the first week of trading in the third quarter, the U.S. dollar regained some amount of strength but retreated towards the end of the week. During the start of the week, the U.S. reported upbeat data and this supported the greenback register some gains. The U.S. dollar also enjoyed safe-haven investment flows as part of the growing concerns as regards the trade wars. Germany’s political crisis was also in focus early last week, but a quick resolution provided some amount relief to the euro.
In the U.K., the government continued with its struggle in deciding on its Brexit approach as negotiations with the European Union continued to remain stuck. However, there was some improvement in the market mood later on as the U.S. trade tariffs on China were implemented without much fanfare. Additionally, the German Chancellor Merkel opened up options for reducing European Union tariffs on cars. The move was meant to reduce tensions with the United States. The euro enjoyed it and it provided a positive impact.
The Minutes of the FOMC Meeting projected optimism as regards the U.S. economy. However, the warning on trade reflected a dovish sentiment. The Non-Farm Payrolls data came in better than analysts expected but the wages data missed market estimates. What remains to be seen is whether the markets continue to ignore tensions and trade tariffs.
The upcoming will see the release of inflation and consumer confidence data from the U.S., among other key releases from elsewhere around the world. Here is an outlook on these economic releases:
#1: Japan BoJ Governor Haruhiko Kuroda Speaks (07/09/2018 Monday 00:30 GMT)
Haruhiko Kuroda, Governor of the Bank of Japan, is scheduled to speak at the BoJ quarterly meeting of the branch managers in Tokyo. The markets often turn volatile during his speeches as traders make an attempt to crack interest rate clues.
#2: Euro Zone ECB President Mario Draghi Speaks (07/09/2018 Monday 13:00 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to testify before the Committee on Economic and Monetary Affairs of the European Parliament about the economy, monetary policy, and virtual currencies in Brussels. Markets may remain volatile during his speeches as traders make an attempt to decode interest rate clues.
#3: Euro Zone ECB President Mario Draghi Speaks (07/09/2018 Monday 15:00 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to testify before the Committee on Economic and Monetary Affairs of the European Parliament the European Systemic Risk Board in Brussels. Markets may remain volatile during his speeches as traders make an attempt to decode interest rate clues.
#4: U.K. GDP (07/10/2018 Tuesday 08:30 GMT)
The U.K. economy expanded by 0.2 percent on a quarter-on-quarter basis in the March quarter, slightly more than the 0.1 percent growth reported in the second estimate. In the prior quarter, the economy had expanded 0.4 percent. The net trade contribution to the economic growth was revised upward. Construction output declined less than what was initially expected.
#5: U.K. Manufacturing Production (07/10/2018 Tuesday 08:30 GMT)
In the U.K., manufacturing production dropped by 1.4 percent in April, following on the 0.1 percent decline in March. This is the largest fall in manufacturing production ever since October 2012 when it fell 1.8 percent. Manufacturing production dropped due mainly due to decreases in production in the metal products; machinery and equipment, and transport equipment sectors. The output from chemical products; wood, paper, and printing; computer, electronic, and optical; rubber and plastic; and food, beverages, and tobacco sectors also declined. Forecast for May 2018: an increase of 1.0 percent
#6: Euro Zone ECB President Mario Draghi Speaks (07/09/2018 Monday 15:00 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to deliver the opening remarks at the ECB Statistics Conference in Frankfurt. Markets may remain volatile during his speeches as traders make an attempt to decode interest rate clues.
#7: Canada BoC Monetary Policy Report (07/11/2018 Wednesday 14:00 GMT)
Released on a quarterly basis, the Monetary Policy Report provides very valuable insight into the central bank’s view on inflation and economic conditions. These are the key factors that contribute to shaping up the monetary policy decisions in the future. The Governor of the Bank of Canada often holds a press conference for discussing the contents of the report approximately 45 minutes after its release.
#8: Canada BoC Rate Statement (07/11/2018 Wednesday 14:00 GMT)
The Bank of Canada releases the Rate Statement eight times in a year. It is the primary tool that the central bank uses for communicating with the investors as regards the monetary policy. It provides the outcome of the latest decision on interest rates and a commentary on the economic conditions that impacted the decision. More importantly, it provides an economic outlook and clues on the direction of interest rates in the future.
#9: Canada BoC Overnight Rate (07/11/2018 Wednesday 14:00 GMT)
The Bank of Canada decided to leave the key interest rate at 1.25 percent during the meeting on May 30. This is in line with analysts’ expectation. Policymakers noted that the core inflation measure remained near 2.0 percent and the recent data supported the Central Bank’s growth outlook of 2.0 percent for the first six months of this year. Correspondingly, the Bank Rate is 1.5 percent and the deposit rate is 1.0 percent. Forecast for July 2018: 1.50 percent
#10: U.S. Crude Oil Stocks Change (07/11/2018 Wednesday 14:30 GMT)
In the U.S., the crude oil stocks rose by 1.245 million barrels during the week that ended on June 29 after the decline of 9.891 million barrels in the prior period which was the largest fall ever since September 2016. Analysts had expected the crude stocks to fall by 3.538 million barrels. In the meantime, the gasoline stocks dropped 1.505 million barrels after jumping 1.156 million barrels in the prior week. Analysts had expected gasoline stocks to decline by 0.817 million barrels.
#11: Canada BoC Press Conference (07/11/2018 Wednesday 15:15 GMT)
The Governor and Senior Deputy Governor of the Bank of Canada hold a press conference after the announcement of the overnight rate. There are two parts to the press conference. In the first part, the officials read out a prepared statement. In the second part, the conference is opened up to questions by the press. As the questions often provoke unscripted answers, heavy market volatility can be expected.
#12: U.K. BoE Governor Mark Carney Speaks (07/11/2018 Wednesday 15:35 GMT)
Mark Carney, Governor of the Bank of England, is scheduled to speak at the conference at the National Bureau of Economic Research in Boston on the global financial crisis. Markets may remain volatile during his speeches as traders make an attempt to decode interest rate clues.
#13: Euro Zone ECB Monetary Policy Meeting Accounts (07/12/2018 Thursday 11:30 GMT)
The European Central Bank releases the Monetary Policy Meeting Accounts eight times in a year, four weeks after the announcement of the Minimum Bid Rate. It provides a detailed account of the most recent meeting of the governing Board of ECB and offers an in-depth insight into the economic conditions that impacted their decision on setting interest rates.
#14: U.S. CPI and Core CPI (07/12/2018 Thursday 12:30 GMT)
In the U.S., the consumer prices rose by 0.2 percent on a month-over-month basis in May, the same rate as in April. The reading was in line with analysts’ expectation. The indexes for shelter and gasoline registered the highest increase. While the medical care index increased by 0.2 percent, the food index remained unchanged. Excluding energy and food prices, consumer prices increased by 0.2 percent compared to the 0.1 percent rise in April. The reading was in line with market forecasts. The shelter index edged up by 0.3 percent. Core CPI edged up 0.2 percent, driven by gasoline and shelter prices, the same level as in the previous month and as expected by analysts. CPI and Core CPI are expected to increase by 0.2 percent each in June 2018.