The Fed’s hawkish interest rate hike helped the U.S. dollar enjoy some strength for some time. However, the gains did not last for a long period of time. Though the speeches by top Fed officials, including Yellen, continued to influence the price of the U.S. dollar. While Dudley, number three at the Fed, spoke in an encouraging manner, worries about inflation expressed by Evans and Harker prevented the dollar from advancing further. As a result, markets are skeptical as regards interest rate hikes in the future.
Meanwhile, the British pound experienced a great deal of volatility last week. While Haldane’s hawkish remarks lifted the pound, Mark Carney drove it lower as he stifled the rate hike talk. Political uncertainty and the start of Brexit talks also had an impact on the pound.
Oil prices declined further to record 7-month lows. However, the Canadian dollar resisted tracking the oil prices closely. The euro also struggled against the U.S. dollar, following reports related to delaying the QE tapering announcement.
Here is an outlook on the events scheduled for the coming week:
#1: German Ifo Business Climate (06/26/2017 Monday 8:00 GMT)
Germany’s Ifo Business Climate Index rose to 114.6 in the month of May after the reading for the previous month was revised upward to the 113 level. The reading for May came in above market expectations that the index will touch the 113.1 mark. The reading for May is also the highest since the start of the series in 1991. The index that provides indications about the current conditions increased to 123.2 from 121.4 in the previous month, The future expectations index rose to 106.5 from 105.2 in the prior month. Forecast for June: 115.1
#2: U.S. Core Durable Goods Orders (06/26/2017 Monday 12:30 GMT)
In April, new orders for long-lasting goods declined by 0.7 percent or $1.6 billion to $231.2 billion, according to the U.S. Census Bureau, after rising for as many as four months in a row. In the month of March, the increase in durable goods orders in the U.S. was 2.3 percent. Core durable goods orders, which excludes transportation, declined by 0.4 percent after the reading for the previous month was revised upward to an increase of 0.8 percent. Analysts expected the new orders for core durable goods to increase by 0.5 percent. Excluding defense, the decrease in new orders for long-lasting goods was 0.8 percent. Forecast for core durable goods orders: increase by 0.3 percent
#3: European Central Bank President Mario Draghi Speaks (06/26/2017 Monday 17:30 GMT)
Mario Draghi, president of the European Central Bank) is scheduled to deliver opening remarks on Central Banking at the European Central Bank Forum meeting in Portugal. Markets often remain volatile during his speeches.
#4: European Central Bank President Mario Draghi Speaks (06/27/2017 Tuesday 8:00 GMT)
Mario Draghi, president of the European Central Bank) is scheduled to deliver a speech on Central Banking at the European Central Bank Forum meeting in Portugal. Markets often remain volatile during his speeches.
#5: Bank of England Financial Stability Report and Mike Carney’s Speech (06/27/2017 Tuesday 9:30 GMT and 10:00 GMT)
The financial stability report is an assessment of the prevailing financial system and potential risks that can upset the financial stability of the country. Information on imbalances and strains provide insight into the direction of the monetary policy in the days to come.
The financial stability report will be presented by Mike Carney, the governor of the Bank of England. He will also speak at a press conference subsequently. Some of the peers of Carney have indicated the need to raise rates amid rising inflation. Though the topic has no relation to interest rates, his comments could rock the pound. Recently, he has discouraged talks on any rate increase.
#6: U.S. CB Consumer Confidence (06/27/2017 Tuesday 14:00 GMT)
The Conference Board’s Consumer Confidence Survey provides information on the prevailing business conditions and the outlook for the coming months. The Confidence Index for the month of May came in at 117.9, down slightly from the reading for the previous month. The index had declined in the month of April as well. While the Present Situation Index rose marginally to 140.7 from 140.3, the Expectations Index decreased to 102.6 from 105.4 in the previous month.
#7: Federal Reserve Chair Janet Yellen Speaks (06/27/2017 Tuesday 17:00 GMT)
Janet Yellen, the chairperson of the Federal Reserve, is scheduled to speak in London at the British Academy ‘President’s Lecture’ 2017 on global economic issues. She is also expected to answer questions from the audience. Market volatility can be expected during her speech.
#8: Band of Canada Governor Stephen Poloz Speaks (06/28/2017 Wednesday 13:30 GMT)
Stephen Poloz, governor of the Canadian central bank, is scheduled to participate in a panel discussion at the European Central Bank Forum meeting on Central Banking in Portugal.
#9: European Central Bank President Mario Draghi Speaks (06/28/2017 Wednesday 13:30 GMT)
Mario Draghi, president of the European Central Bank, is scheduled to participate in a panel discussion at the European Central Bank Forum meeting on Central Banking in Portugal.
#10: Bank of England Governor Mike Carney Speaks (06/28/2017 Wednesday 13:30 GMT)
Mike Carney, governor of the Bank of England, is scheduled to participate in a panel discussion at the European Central Bank Forum meeting on Central Banking in Portugal.
#11: Bank of Japan Governor Kuroda Speaks (06/28/2017 Wednesday 13:30 GT)
Haruhiko Kuroda, governor of the Bank of Japan, is scheduled to participate in a panel discussion at the European Central Bank Forum meeting on Central Banking in Portugal.
#12: U.S. Crude Oil Inventories (06/28/2017 Wednesday 12:30 GMT)
In the U.S., crude oil stocks fell by 2.451 million barrels during the week that ended on June 16, 2017, after they declined by 1.661 million in the prior period. The market had expected the stocks to decline by 2.106 million barrels. Gasoline stocks declined by 578,000 barrels as against analysts’ expectation that they would rise by 443,000 barrels. Forecast for the next week: decline by 0.5 million barrels
#13: U.S. Final GDP (06/29/2017 Thursday 12:30 GMT)
The U.S. economy grew at an annualized rate of 1.2 percent on a quarter-on-quarter basis during the first three months of this year, which is better compared to the first estimate of 0.7 percent. The reading for the quarter beat market expectations for a growth of 0.9 percent. Though it is the lowest expansion rate in a year, it is better than the weakest first-quarter growth recorded in three years in initial estimates. Nonresidential fixed investment and consumer spending rose faster than expected, but the drag from public investment and spending was lower compared to the initial estimates. In contrast, the decrease in private inventories was more. It is expected that the final estimate will confirm the second estimate of 1.2 percent GDP expansion.
#14: U.S. Unemployment claims (06/29/2017 Thursday 12:30 GMT)
The number of American people filing for jobless benefits rose by 3,000 to 241,000 during the week that ended on June 17 after the reading for the previous week was revised to 238,000 claims. The reading also came in above market expectations for 240,000 claims. With this, the claims have remained below the 300,000 for 120 consecutive weeks now. The is the longest period for which the claims have remained below the threshold level since 1970. The four-week moving average, which eliminates weekly volatility, increased by 1,500 to the highest level of 244,750 claims since early April. Forecast for the next period: 240,000
#15: U.K. Current Account (06/30/2017 Friday 8:30 GMT)
The current account deficit in the U.K. declined by 13.6 billion pounds to 12.1 billion pounds in the last quarter of 2016 from 25.7 billion pounds for the prior period. This is the smallest deficit since the first quarter of 2012. The reading came in better than the market expectation for a deficit of GBP 16 billion pounds. Forecast for the first quarter of 2017: deficit of 16.5 billion
#16: Canada GDP (06/30/2017 Friday 12:30 GMT)
Canada’s economy grew by 0.9 percent on a quarter-on-quarter basis in the first quarter of 2017 after the reading for the previous period was revised upward to a growth rate of 0.7 percent. A surge in the purchase of vehicles and a rebound in investment in businesses contributed to the GDP growth, while exports declined. On an annualized basis, the GDP increased by 3.7 percent, beating analysts’ expectation of 3.6 percent. Forecast for second quarter: 0.5 percent growth