There’s plenty to look forward to in the FX market this week, with several interest rate announcements scheduled across G7 and elsewhere, as well as inflation metrics from the UK, Europe and Japan, GDP figures from New Zealand and US and Canadian Retail Sales.
There will be a lot of scrutiny on the UK, not least because of the political situation. But is this the week that the Bank of England will commence an interest easing cycle? Last month, 2 members of the 9-person committee voted to cut. The all-important UK inflation print on Wednesday may show us the way. 2% and below and the committee has the green light to act and add a bit of good cheer to an otherwise so-far miserable UK summer.
On Tuesday, the Reserve Bank of Australia will be first to announce its interest rate decision. Australian inflation is still high. Consensus, therefore is for “unchanged” at 4.35%. Later in the morning, Eurozone Core inflation numbers are released with expectations for a print of 2.9% y.o.y for May. German ZEW Economic Sentiment will follow shortly afterwards and is forecast to show a slightly more optimistic reading of 50 for June vs 47.1 for May. US Retail Sales in the afternoon are also expected to be more positive at +0.3% for the month of May.
Wednesday’s big release is scheduled for 7am UK time. UK core inflation is expected to fall to 3.5%. Focus will be on the Headline number. The average forecast is for 2%. GBPUSD, EURGBP and other GBP crosses will be very volatile around this announcement. New Zealand Q1 GDP, out, late in the evening is expected to have climbed to 0.2% y.o.y.
Thursday, should be very exciting! First up, at 8.30am UK time, Swiss interest rates. Expect unchanged at 1.5%. Then at 9.00am, Norwegian interest rates; expectations too are for “unchanged” at 4.5%. The all-important Bank of England decision is scheduled for 12.00pm. Although many analysts are predicting “unchanged at 5.25%, I have a sneaking feeling that a cut of a quarter of a percent is a real possibility!
Friday starts with Japanese inflation figures for May with expectations for a rise in the core number to 2.6% y.o.y. German Manufacturing numbers are hoping to impress with a slight rise in June to 46.4. Canadian Retail Sales in the afternoon are expected to show a gain in April to 0.9%.
Good Luck and Good trading!
Ben Robson is Head of Institutional E-FX at Swiss Finance Corporation. He is also the Amazon Best Selling Author of Currency Kings – How Billion traders Made their Fortune Trading Forex. McGraw Hill 2017
