Early Monday morning markets are reacting to the shock of former President Trump’s lucky escape from an assassination attempt. Cryptos spiked on Sunday morning. Gold which rallied on Friday is little changed.
Those who are hoping the Fed will cut interest rates soon were given some good cheer last week by Fed Chair Powell who stated that the US is “no longer an overheated economy.” JP Morgan’s CEO Jamie Dimon has a contrasting view citing large fiscal deficits, infrastructure needs, restructuring of trade and remilitarisation of the World as causes of inflation which may keep interest rates higher for longer. US CPI pointed slightly lower on Thursday and the Japanese authorities intervened to push USDJPY lower. Markets were therefore slightly more volatile than in previous weeks which was generally better for volumes.
To this week and volatility is expected to continue despite the French “Grand Vacances” starting. Inflation metrics from several key centres and an ECB interest rate decision are the major announcements.
On Tuesday, after German ZEW Economic Sentiment numbers (expected lower for July at 44.3 vs 47.5) we have Canadian inflation numbers for June. CPI last time out was 2.9% y.o.y with Core at 1.8%. US Retail Sales are expected to be flat for June.
On Wednesday the UK releases inflation figures. Last time out Headline inflation hit the Bank of England’s 2% target. Core remained elevated at 3.5%. Expectations are for another 2% print for Headline and 3.4% y.o.y for Core. Eurozone Core inflation is out at 10am with expectations for it to remain at 2.9% y.o.y.
Australian employment numbers are released first thing on Thursday with 20k new jobs expected to have been added in June and the unemployment rate stable at 4%. UK employment numbers for May follow with the UK unemployment rate expected to stay at 4.4%. ECB interest rates are forecast to stay on hold at 4.25%.
Late Thursday, early Friday, both New Zealand and Japan release inflation numbers. Of these, the NZ figure is a quarterly one with Q2 inflation expected to dip to 3.5% y.o.y from 4% previously. It’s possible that Japanese inflation may rise y.o.y for June from last month’s 2.8%.
Plenty to look at and plenty of trading opportunities across G7 and XAUUSD.
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
