Weekly Outlook: 2014, June 15 - 22

NZD/USD weekly outlook: June 16 - 20

The New Zealand dollar fell from a five-week high against its U.S. counterpart on Friday, as escalating tensions in Iraq boosted demand for safe-haven assets.

NZD/USD hit 0.8699 on Thursday, the pair’s highest since May 7, before subsequently consolidating at 0.8665 by close of trade on Friday, down 0.26% for the day but 1.9% higher for the week.

The pair is likely to find support at 0.8604, the low from June 12 and resistance at 0.8699, the high from June 12.

Concerns over the ongoing Sunni insurgency in Iraq hit market sentiment on Friday, after insurgents took control of the Iraqi cities Mosul and Tikrit, fuelling fears over the impact of reduced oil supply on global growth.

The escalating violence in Iraq overshadowed a report showing that U.S. consumer sentiment unexpectedly deteriorated in June.

The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.

The kiwi rallied more than 1% against the greenback on Thursday after the Reserve Bank of New Zealand raised its benchmark interest rate to a five-year high of 3.25% from 3.00% and suggested that borrowing costs could rise again this year.

Commenting on the decision, RBNZ Governor Graeme Wheeler said "it is important that inflation expectations remain contained and that interest rates return to a more neutral level."

Data from the Commodities Futures Trading Commission released Friday showed that speculators modestly decreased their bullish bets on the New Zealand dollar in the week ending June 10.

Net longs totaled 16,855 contracts as of last week, compared to net longs of 17,531 contracts in the previous week.

In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, while first quarter growth data out of New Zealand will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.

Monday, June 16

• The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.

Tuesday, June 17

• The U.S. is to produce data on housing starts, building permits and consumer prices.

Wednesday, June 18

• New Zealand is to release data on the current account.
• Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The announcement is to be followed by a press conference with Fed Chair Janet Yellen.

Thursday, June 19

• New Zealand is to publish data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
• The U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

GBP/USD weekly outlook: June 16 - 20

The pound rose to almost five-year highs against the dollar on Friday, one day after Bank of England Governor Mark Carney said U.K. interest rates could rise sooner than investors expect.

GBP/USD was up 0.24% to 1.6968 late Friday, after rising as high as 1.6990 earlier in the session, close to the five year high of 1.6898 set on May 6. The pair ended the week with gains of 0.99%.

Cable is likely to find support at 1.6920, Friday’s low and resistance at the 1.7000 level.

Sterling’s gains came after Carney said Thursday that rapid economic growth and the steep decline in the jobless rate mean that the time to begin raising interest rates is growing closer.

"There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect," the BoE governor said.

Official data on Wednesday showed that the U.K. unemployment rate fell to a five-year low of 6.6% in the three months to April.

Carney said the bank will monitor the labor market closely to determine the right moment to start raising rates and reiterated that when rates do start to rise they will do so only gradually.

The comments prompted investors to bring forward expectations for a rate hike by the BoE. Some market watchers already expect the central bank to start raising rates from their record low 0.5% late this year.

In the U.S., data on Friday showed that U.S. consumer sentiment unexpectedly deteriorated in June.

The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.

Elsewhere, sterling rose to one-and-a-half year highs against the broadly weaker euro on Friday, with EUR/GBP down 0.30% to 0.7981 at the close of trade, extending the week’s losses to 1.32%.

In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, while U.K. data on retail sales and consumer prices will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 16

• The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.

Tuesday, June 17

• The U.K. is to release data on consumer price inflation, which accounts for a majority of overall inflation.
• Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.

Wednesday, June 18

• The BoE is to publish the minutes of its latest policy setting meeting.
• Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The announcement is to be followed by a press conference with Fed Chair Janet Yellen.

Thursday, June 19

• The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

Friday, June 20

• The U.K. is to round up the week with data on public sector net borrowing.

EUR/USD weekly outlook: June 16 - 20

The broadly weaker euro slid lower against the dollar on Friday, re-approaching four-month lows as concerns over the escalating conflict in Iraq bolstered safe haven demand for the dollar.

EUR/USD was down 0.08% to 1.3541 at the close, not far from the four-month trough of 1.3502 reached on June 5. For the week, the pair lost 0.38%.

The pair is likely to find support at the 1.3500 level and resistance at 1.3601, the high of June 10.

The single currency has weakened broadly since the European Central Bank cut rates to record lows earlier this month, in order to combat the threat of persistently low inflation in the euro area.

Concerns over the ongoing Sunni insurgency in Iraq hit market sentiment on Friday, amid fears over the impact of reduced oil supply from one of the world’s largest producers on global economic growth.

The dollar was little changed after a report showed that U.S. consumer sentiment unexpectedly deteriorated in June.

The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.

Elsewhere Friday, the euro slumped to one-and-a-half year lows against the stronger pound, with EUR/GBP down 0.30% to 0.7981 late Friday, extending the week’s losses to 1.32%.

Sterling strengthened broadly after Bank of England Governor Mark Carney said on Thursday that U.K. interest rates could rise sooner than investors expect.

The euro edged higher against the yen, with EUR/JPY rising 0.26% to 138.18, not far from the four month low of 137.71 struck in the previous session. For the week, the pair lost 0.81%.

In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, while Monday’s preliminary report on euro zone inflation will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 16

• The euro zone is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation.
• The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.

Tuesday, June 17

• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.

Wednesday, June 18

• The Federal Reserve is to announce its federal funds rate and publish its rate statement. The announcement is to be followed by a press conference with Fed Chair Janet Yellen.

Thursday, June 19

• The Eurogroup of euro area finance ministers are to hold meeting in Brussels.
• The U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

Friday, June 20

• Germany is to publish data on producer price inflation.
• The euro zone is to release data on the current account, while the euro area’s Economic and Financial Affairs Council is to hold meetings in Brussels.

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