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Economic calendar: Fed passes the baton to ECB

Summary:

  • ECB meeting is the most important event today, but it’s not the only game in town
  • UK retail sales could provide more insight for GBP traders
  • Swedish inflation report remarkably important as Riksbank sticks to a rate hike later this year

The Federal Reserve did its job yesterday, and now it’s passing the baton to the ECB which is expected to announce its asset purchase programme will end in the last quarter this year. However, before we switch to the ECB meeting it’s worth keeping a close eye on two important reports from the UK as well as Sweden.

8:30 am BST - Sweden’s inflation for May: Today’s inflation from Sweden is estimated to come above the newest Riksbank forecast fuelling (quite limited) expectations for a rate hike later this year (the central bank expects it to happen in the fourth quarter). If so, the SEK might be offered support continuing to strengthen against the US dollar (our premium analysis might be found here). Headline CPI is estimated to come in at 1.9% yoy (up from 1.7%) while CPIF (the official gauge the Riksbank aims for) should show 2.1% yoy (up from 1.9%).

9:30 am BST - UK retail sales: A package of macroeconomic releases we got from the UK so far this week has been ambiguous, but it’s not an end yet as the retail sales report is due this morning. We stick to our view the US dollar strength is coming to an end, and the yesterday’s Fed meeting just corroborated this view (despite a hawkish statement), hence we expect any downside on the cable might prove to be temporary. Headline retail sales should come in at 0.5% mom, while core (excluding auto fuel) ought to produce a 0.3% increase. The report is for May.

12:45/1:30 pm BST - ECB decision/press conference: The ECB is the most important point for investors today as it may produce far-reaching consequences across many classes of assets. The bank is forecast to announce an end of its APP (some claim it might postpone this decision by month though), but it’s been more or less already priced in, so the weight of risks may be moved to forward guidance. If the ECB removed a reference that "rates to remain at their present levels for an extended period of time" it would see the euro soaring, but this is unlikely to happen at this stage though. More on the event might be found here.

1:30 pm BST - US retail sales: The US data remains in the spotlight, hence today’s reading seems to be naturally worth looking at. Headline sales should rise 0.4% mom while ex-auto 0.5% mom.

Central bank speakers for today:

  • 1:30 pm BST - ECB’s Draghi
  • 3:00 pm BST - Norges Bank’s Matsen
  • 4:30 am BST, Friday - RBA’s Ellis

link do file download linkThe EURUSD continues bouncing back following a brief pullback after the Federal Reserve meeting. Scope for further gains seems to be abundant. Source: xStation5

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