Weekly Outlook: 2016, June 12 - June 19

The US dollar was on the back foot, but the managed to recover some of the losses. Inflation data in the UK and the US, Employment data from the UK and Australia, US retail sales and no less than 4 rate decisions,with the Federal Reserve standing out from the crowd. These are the main events for this busy week.

1. UK Inflation data: Tuesday, 8:30. A monthly rise of 0.4% is expected.
2. US retail sales: Tuesday, 12:30. For the month of May, both headline and core figures carry expectations of a rise of 0.4%.
3. UK jobs report: Wednesday, 8:30. The unemployment rate for April is expected to remain at 5.1% and average hourly earnings are predicted to rise 1.7%.
4. US PPI: Wednesday, 12:30. Headline PPI is expected to rise by 0.3% and core PPI by 0.1%.
5. US Fed decision: Wednesday, statement and forecasts at 18:00, press conference at 18:30.
6. Australian employment data: Thursday, 1:30. A gain of 15.1K jobs is expected and the unemployment rate is unlikely to change.
7. Japan rate decision: Thursday.
8. Swiss rate decision: Thursday, 7:30. Even lower negative rates could hit the franc, but it seems unlikely at the moment.
9. UK rate decision: Thursday, 11:00. Carney voiced his concern that a vote to leave the EU could change the outlook for output and inflation, prompting a change in monetary policy.
10. US inflation data: Thursday, 12:30. Headline inflation is expected to rise by 0.3% and core inflation by 0.2%.
11. US Philly Fed Manufacturing Index: Thursday, 12:30.
12. US Unemployment Claims: Thursday, 12:30. Claims are expected to stand at 267K this time.
13. US Building Permits: Friday, 12:30.
14. Mario Draghi speaks: Friday, 15:00. ECB President Mario Draghi will speak in Munich.

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Economic Calendar Of The Week - June 13-17, 2016

The US dollar was on the back foot, but the managed to recover some of the losses. Inflation data in the UK and the US, Employment data from the UK and Australia, US retail sales and no less than 4 rate decisions, with the Federal Reserve standing out from the crowd. These are the main events for this busy week. Join us as we explore the market movers on Forex calendar.

The week is spotted with economic data but there are two significant events that will dominate trading this week. These are two central bank meetings and press conferences. The Federal Reserve will end its two-day meeting with the release of its statement and outlook followed by a press conference by Janet Yellen on Wednesday and the Bank of Japan will meet on Thursday.

The Federal Reserve kept interest rates unchanged in April, but left the door open to a rate hike in June. Fed officials acknowledged that economic growth seemed to have slowed despite the solid labor market, saying they are closely watching inflation and global economic headwinds. Household spending moderated, but their real income had risen at a “solid rate”. A rate hike is off the cards also for this June meeting. The specter of a Brexit as well as the poor jobs report means that the data dependent Fed will err on the side of caution. We could get hints about the decision in July. Assuming improving data and no Brexit, we could still have a mid-summer hike. Will Yellen provide hints? Perhaps she will be cautious in the press conference but the dot-plot could serve as a hawkish hint. If the Fed maintains a median forecast for 2 hikes this year and doesn’t cut it as it often does, this could keep July very alive. Growth, inflation and employment forecasts are not expected to be modified too much.

The Bank of Japan kept its monetary policy unchanged in April, failing to deliver expected stimulus measures. The bank maintained its negative 0.1% deposit rate and its 80 trillion-yen base money target, but leaving the door open to additional easing measures and loans to areas impacted by the Kyushu earthquakes. BOJ Governor Haruhiko Kuroda said that the central bank remained committed to achieving its 2% inflation target in about two years. Kuroda dismissed the possibility of the BOJ directly financing the government but said he did not see any problem in the BOJ’s plan to buy government bonds.

There are also two other central bank meetings this week, which will spark some volatility. On Thursday both the Swiss National Bank will meet as well as the Bank of England decision. Neither are expected to make any changes but with Brexit just a week away central bank comments could spark some market action.

Keeping markets on edge will be a speech on Friday from Mario Draghi. At the Brussels Economic Draghi admitted that bank balance sheets are not yet fully repaired. He reiterated that governments must take part in boosting growth in the Eurozone economy since the task cannot be done solely by the ECB. Therefore, fiscal policies should comply with the monetary policy and not against it. Furthermore, doubts over the future of the euro will only spur doubts and weakness detaining growth.

Meanwhile, the Chinese economy will be a major focal point, where retail sales and industrial production figures provide an idea of how its economy looks from both an export and domestic consumption perspective.

No doubt, with the EU referendum approaching, there will be an increasingly large amount of focus upon polls, which are expected to come thick and fast as the event approaches. For that reason, the release of polls, alongside a BoE decision and CPI reading means GBP should see substantial volatility for the week ahead.