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Week Ahead: GBP to be volatile ahead of the BoE meeting?

George Walker, Thursday, 11 June 2020

Week Ahead 1

 
The Federal Reserve gave markets a reality check last week as they mentioned that the current environment is the ‘biggest economic shock in living history. They also commented that they have no intentions to raise interest rates until 2022 at the earliest causing investors to think that there will be no short-term bounce back to normality.

Concerns over a potential second wave as economies slowly start to reopen saw markets reverse recent gains, notably the NASDAQ, which saw record highs as the world relied on tech and online services more than ever. This week, it’s the turn of the UK central bank to declare its latest stance on monetary policy.

It’s a quiet start to the coming week barring any surprise announcements over the weekend, but macro-economic data starts ramping up from Tuesday onwards.

JPY in focus

The Bank of Japan kicks off Tuesday morning with its latest interest in the early hours of Tuesday morning. Analysts are forecasting no change to the negative rates which currently sit at -0.10% and traders will be watching the press conference at 07:00 BST closely to hear if any additional stimulus is needed to boost the Japanese economy. At the same time as the BoJ press conference is underway, we see employment data released from the UK and Consumer Price Index figures from Germany so traders of GBPJPY/EURJPY could be in for an interesting start to Tuesday morning.

CPI data hits

Consumer Price Index data from the UK, eurozone and Canada all hit the wires on Wednesday. CPI numbers are a major gauge of inflation and one which central banks typically use to review and amend monetary policy. Gross Domestic Product figures from New Zealand just before midnight could see volatility in the value of NZD so traders of this currency will need to be mindful of positions held overnight.

Busy end to the week

Thursday is potentially the busiest day on the macro front as employment data from Australia is released overnight. Employment has been a focal point since the coronavirus pandemic took hold and as a result, traders are monitoring these numbers closer than ever before.

The Swiss National Bank updates the markets on their latest interest rate decision accompanied by a press conference as European markets open for trading. The SNB has been eager to bring down the value of the Swiss franc over the past two months and expectations are they will pause on further devaluation methods. However, as they attempt to keep the value of CHF modest, there could be subtle wording during the press conference in an attempt to prevent a rally in the currency.

As we hit midday in the UK, all eyes will be on the Bank of England and their interest rate decision. The BoE has a very difficult period ahead as they try to limit the damage of the UK lockdown and position the economy as best as possible for a strong recovery. The UK has been one of the hardest hit economies as a result of the coronavirus pandemic and the central bank has had to take dramatic measures to prevent an economic meltdown. Another focal point for the BoE is the UK commitment to leave the EU at the end of the year. Little progress seems to be being made in negotiations and could ultimately result in a ‘no deal Brexit’ if no extension is agreed by month end so the central bank will need to bear this in mind as well when making any decisions on monetary policy. We’ve seen the impact interest rate decisions and statements can have on major currencies and indices so traders of GBP or UK equities will need to pay close attention at 12:00 on Thursday.

Following the comments from the Federal Reserve on employment last week, the initial and continuing jobless claims from the US could see heightened volatility as investors will be closely monitoring these numbers to see if a second wave downturn is inevitable. The jobs market is key to a healthy economy hence the additional interest in these figures.

We round off the week on Friday with National Consumer Price Index data from Japan and retail sales from the UK and Canada.

As we have already seen, markets continue to move rapidly and sometimes unpredictably so traders need to be mindful position sizes and risk controls during these turbulent times.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 15 June

03:00 NZD ANZ Monthly Inflation Gauge
03:00 CNY NBS Press Conference
03:00 CNY Industrial Production
03:00 CNY Retail Sales
07:30 CHF Producer and Import Prices
10:00 EUR Trade Balance
13:30 USD NY Empire State Manufacturing Index
13:30 CAD Manufacturing Sales
13:30 CAD Manufacturing Sales

UK Company Announcements:

Sthree

US Company Announcements:

N/A

Tuesday, 16 June

02:30 AUD RBA Meeting Minutes
02:30 AUD House Price Index
04:00 JPY BoJ Interest Rate Decision
04:00 JPY BoJ Monetary Policy Statement
07:00 GBP ILO Unemployment Rate
07:00 GBP Average Earnings Excluding Bonus
07:00 GBP Average Earnings Including Bonus
07:00 GBP Claimant Count Rate
07:00 JPY BoJ Press Conference
07:00 GER Consumer Price Index
07:00 GER Harmonised Index of Consumer Prices
09:30 GBP Claimant Count Change
10:00 EUR Labour Cost
10:00 EUR ZEW Survey – Economic Sentiment
10:00 GER ZEW Survey – Current Situation
10:00 GER ZEW Survey – Economic Sentiment
13:30 USD Retail Sales
13:30 USD Retail Sales ex Autos
13:30 USD Retail Sales Control Group
13:55 USD Rebook Index
14:15 USD Industrial Production
21:30 USD API Weekly Crude Oil Stock

UK Company Announcements:

Ashtead Group
Telecom Plus

US Company Announcements:

Lennar Corporation

Wednesday, 16 June

00:50 JPY Imports
00:50 JPY Exports
01:30 AUD Westpac Leading Index
07:00 GBP Consumer Price Index
07:00 GBP Core Consumer Price Index
07:00 GBP Retail Price Index
09:30 GBP Producer Price Index – Input
09:30 GBP Producer Price Index - Output
09:30 GBP PPI Core Output
10:00 EUR Consumer Price Index
10:00 EUR Consumer Price Index – Core
13:30 USD Building Permits
13:30 USD Housing Starts
13:30 CAD Consumer Price Index
13:30 CAD Consumer Price Index – Core
13:30 CAD BoC Consumer Price Index Core
14:00 CHF SNB Quarterly Bulletin
15:30 USD EIA Crude Oil Stocks Change
23:45 NZD Gross Domestic Product

UK Company Announcements:

De La Rue

US Company Announcements:

N/A

Thursday, 17 June

02:30 AUD Part-Time Employment
02:30 AUD Fulltime Employment
02:30 AUD Employment Change
02:30 AUD Unemployment Rate
02:30 AUD Participation Rate
02:30 AUD RBA Bulletin
08:30 CHF SNB Interest Rate Decision
08:30 CHF Monetary Policy Assessment
09:00 CHF SNB Press Conference
09:00 EUR Economic Bulletin
12:00 GBP BoE Interest Rate Decision
12:00 GBP Bank of England Minutes
12:00 GBP Monetary Policy Summary
12:00 GBP BoE Asset Purchase Facility
12:00 GBP BoE MPC Vote Hike
12:00 GBP BoE MPC Vote Cut
12:00 GBP BoE MPC Vote Unchanged
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
13:30 USD Philadelphia Fed Manufacturing Survey
13:30 CAD ADP Employment Change
15:30 USD EIA Natural Gas Storage Change

UK Company Announcements:

National Grid
Safestore

US Company Announcements:

Kroger Company

Friday, 19 June

00:30 JPY National Consumer Price Index
00:30 JPY National CPI ex Fresh Food
00:30 JPY National CPI ex food, Energy
00:50 JPY BoJ Monetary Policy Meeting Minutes
07:00 GBP Retail Sales
07:00 GBP Retail Sales ex-Fuel
07:00 GER Producer Price Index
09:30 GBP Public Sector Net Borrowing
12:00 GBP BoE Quarterly Bulletin
13:30 CAD Retail Sales
13:30 CAD Retail Sales ex Autos
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

Wood Group (J)

US Company Announcements:

CarMax Inc

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