The GBP/USD pair rose during the course of the week, slamming into the
1.70 handle. This area offered resistance again, and now as a result we
closed just below it. However, if we can get above the 1.70 level, we
feel that this market goes much, much higher. In fact, the market should
head to the 1.75 level if we get clear that area, making it a very
bullish market to be in. We have no interest in selling this market, and
believe that short-term pullbacks will continue to bring in buyers
The EUR/USD pair spent most of the week falling, and tested the 1.35
level for support. Because of this, we think that the area will be
targeted, and if we can break below there on a daily close, this market
could fall apart. The Euro would fall to the 1.33 level as far as we can
tell, and would be a sell. However, this area has been fairly resilient
so we are quite ready to start selling yet. The bounce could happen,
and we could stay within the fairly tight range that we have been in for
the last month.
Simple stock investing glossary for your handy reference,
FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)
Group G Germany vs. Portugal
Group G Ghana vs. US
Group F Iran vs. Nigeria
Eurozne CPI is forecast to be 0.5% on the year for May, which was
the original estimate. The core CPI expected to be 0.7%, also as
originally estimated. May’s inflation data gave room for the ECB to act,
which would maintain bearish pressure on the EUR.
US Empire State Manufacturing Index for June is expected to be
15.2, a drop from the 19.0 reading for May. May’s reading was the
highest in 2 years, and even a drop to 15.2 would be the 2nd highest in 2
years.US Industrial Production for May is forecast to have grown 0.6%, after a reading of -0.6% contraction for April.
Group H Belgium vs. Algeria
Group H Russia vs. Korea
Group A Brazil vs. Mexico
RBA’s Monetary Policy Meeting Minutes will be released. It will
cover the June 3rd RBA decision to keep the official cash rate at 2.50%.
The last rate change was in July 2013, when the bank cut rates from
2.75% to 2.50%.
UK Consumer Price Inflation (CPI) y/y for May is forecast to be
1.7%, slightly lower than the 1.8% annual inflation rate reported for
April. The lower the inflation rate, the more room the BoE has to
maintain its current monetary policy. If the inflation rate however
edges toward 2.0%, the market will likely move rate hike expectations to
earlier in 2015. Governor Carney spooked the BoE doves when he said the
bank might raise rates earlier than the markets expected, and the
markets expected about mid-2015, so now the expectations will be
shifting to early 2015.
German ZEW Economic Sentiment for June is forecast to rise to
35.2 from the 33.1 reading in May. Although this would show a rebound, a
35.2 reading would be the second lowest in 17 months, since January
2013, when it was 31.5.
The Eurozone’s ZEW Economic Sentiment for June is forecast to be
59.6 up from the 55.2 reading in May. A reading close to 60 is very
positive, as it represents the readings of economic sentiment before the
financial meltdown in 2007 and 2008.
US Building Permits is forecast to be 1.07M on an annualized term
for May. This is not much different from the 1.08M reading in April,
and reflects an increasing trend since the aftermath of the financial
US CPI m/m for May is expected to edge down to 0.2% from 0.3% in
April. The core reading is forecast to remain at 0.2%. Higher than
expected inflation can move FOMC rate hike expectations forward, while
low inflation allows the bank to keep rates low for longer.
Group B Australia vs. Netherlands
Group A Cameroon vs. Croatia
Group B Spain vs. Chile
The Bank of Japan’s Monetary Policy Meeting Minutes will be
released at the start of the 6/18 session, which is still the evening of
6/17 in the US. These minutes will explain the latest vote to maintain
the monetary stimulus as is, even amid economic improvements.
The Bank of England’s vote to maintain rates early in the month will be revealed. Anything other than a unanimous
vote would reflect a shift in the MPC’s policy perspective.
FOMC Statement and Press Conference will probably be the most
anticipated event risk this week. The bank is expected to keep rates the
same, and continue to taper at the rate of $10B less QE a month from
its now $45B/month rate. The market is monitoring for clues on whether a
rate hike will come earlier in 2015, or in the second half of the year.
New Zealand’s GDP for Q1 is forecast to have been 1.2%, up from
the 0.9% reading for Q4 2013. With NZD-strength returning, it will be
important to see strong economic data to support the current rate of
rate hikes – 3 rate hikes in a row adding to 75bps – that brought the
OCR to 3.25%.
Group C Colombia vs. Côte d’Ivore
Group C Japan vs. Greece
Group D Uruguay vs. England
The Swiss National Bank Monetary Policy Announcement and Press Conferenceare
usually not market movers. The SNB is expected to maintain its key rate
near 0% and continue to support the EUR/CHF above 1.20.
UK Retail Sales m/m for May is forecast to have fell, at -0.5% after a strong 1.3% readign in April.
US Jobless Claims is forecast to be 316K this week, similar to
the 317K last week. A reading close to 300K or under 300K should point
towards a steady job market recovery. We are not quite there, but closer
in the recent couple of months vs. the first few months of the year.
Overall, since the financial crisis, jobless claims numbers have been
Philly Fed Manfuacturing Index is forecast to be 14.3 in June,
slightly down from the 15.4 in May. This would still be a relatively
positive reading despite a slight drop off from May.
Group D Italy vs. Costa Rica
Group E Honduras vs. Ecuador
Group E Switzerland vs. France
German PPI is forecast to have been 0.2% in May, up from -0.1% in
April. Wholesale inflation has been low, which gives ECB more room to
act. A return to 0.2% or higher for a few months will be needed to
suggest inflation steady enough for a rate hike.
BoJ Governor Haruhiko Kuroda will speak. The Bank of Japan
has been keeping the stimulus measures open ended. It has mentioned
many areas of success this year due to the aggressive stimulus measures,
which invites the idea of tapering. First mention of tapering, and you
will probably see a surge in the Japanese Yen. It will probably not come
on Friday, but always be ready.
Canada’s CPI m/m in May is expected to have been 0.2%, down from the 0.3% in April. The core CPI is expected to remain at 0.2% on the month.
Canada’s Retail Sales m/m in May is forecast to have rebounded to
a growth of 0.4%, after a -0.1% reading in April. The core retail sales
reading is also expected to rise to 0.4% from the 0.1% in April.