FOUR main central banks will publish financial coverage choices within the subsequent few days! Suppose you’re prepared for the potential volatility these occasions will encourage?
However earlier than that, ICYMI, I’ve written a fast recap of the market themes that pushed foreign money pairs round final week. Verify it!
And now for the closely-watched potential market movers this week:
Main Financial Occasions:
U.Okay.’s labor market information (June 14, 6:00 am GMT) – The U.Okay.’s unemployment charge has been bettering steadily because the begin of the 12 months when it went beneath the 4.0% mark.
Analysts now count on the jobless charge to stay at 3.7% in Could whereas employment, common earnings, and claimant depend numbers are anticipated to print higher figures in comparison with the earlier month.
Optimistic labor market numbers would reduce fears of a recession and assist BOE’s plans to hike its charges each month.
FOMC coverage choice (June 15, 6:00 pm GMT) – Everybody and their momma count on the Fed to lift its rates of interest by 50 foundation factors to 1.50% this week.
Because of Friday’s hotter-than-expected inflation figures, although, markets are additionally speaking extra 50-bp charge hikes AND the next peak earlier than Chairman Powell and his crew pause their tightening.
Regulate the Fed’s assertion and presser to see if we must always count on a 50-bp charge hike in July and probably a pause in September.
China’s information dump (June 15, 2:00 am GMT) – Lockdown prospects on the earth’s second-largest financial system left merchants feeling shookedt final week, so you may wager that at the least some danger merchants might be watching this week’s releases.
Annual industrial manufacturing may enhance from -2.9% to -0.8% in Could; retail gross sales are anticipated to recuperate from -11.1% to -7.5%; fastened asset funding would possibly decelerate from 6.8% to five.9% to date this 12 months, whereas the unemployment charge may keep at 6.1%.
SNB’s coverage assertion (June 16, 7:30 am GMT) – Markets principally count on the Swiss Nationwide Financial institution (SNB) to keep up its 0.75% rates of interest, so it might be fascinating to see how CHF reacts if members increase their charges by 25 foundation factors as some are predicting.
A shock charge hike may push CHF larger, however volatility throughout the board could also be restricted as merchants await BOE’s occasion scheduled a couple of hours later.
BOE’s coverage choice (June 16, 11:00 am GMT) – The Financial institution of England (BOE) is anticipated to lift its rates of interest by 25 foundation factors for a fifth consecutive month this week because the central financial institution tries to rein in client inflation.
However look out for cracks within the members’ resolve to maintain elevating their rates of interest! Phrase round is that less-than-stellar non-public sector output development has highlighted elevated recession dangers and are making some members cagey about aggressive charge hikes.
This week’s U.Okay. information releases like industrial manufacturing, unemployment, and retail gross sales might give us clues on the U.Okay.’s development prospects and second-round inflation results.
BOJ’s coverage assertion (June 17, Asian session) – The Financial institution of Japan (BOJ) isn’t anticipated to announce coverage modifications this month, although members might use their flip underneath the highlight to spotlight their “issues” in regards to the yen’s latest sharp strikes.
Foreign exchange Setup of the Week: GBP/USD
Cable noticed a Tweezer Tops-like sample across the 1.2650 and now the pair is quick approaching the 1.2100 mark that had served as assist in 2017, 2019, and 2020.
This week’s FOMC and BOE occasions simply would possibly drag GBP/USD again to its earlier assist. The FOMC is anticipated to lift its rates of interest by one other 50 foundation factors and trace at additional tightening within the subsequent few months.
In distinction, BOE will hold at its 25-bp charge hikes and probably warning in opposition to extra aggressive tightening amidst elevated recession dangers within the U.Okay.
After all, we may see a buy-the-rumor, sell-the-news situation the place merchants achieve confidence within the central banks’ plans.
GBP/USD may discover assist from the 1.2200 Could lows and make its manner again to 1.2650.
If Cable dips again all the way down to its 1.2100 assist, although, then it’s possible you’ll wish to think about buying and selling a weeks-long bounce.
If there’s sufficient bearish strain, then you may also bust out your breakout playbooks.
Good luck and good buying and selling this one!