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What to watch for this week

Emmanuel Macron is now officially the new president of France. However, his win has had only a minor impact on financial markets as such outcome was already priced in. That is why investors focus turned to other events such as central banks meeting. Both RBNZ and Bank of England delivered a dovish surprises that took a toll on their currencies. The pound suffered as BOE remains careful in assessing the impact of Brexit and its implications for monetary policy. In the upcoming week the currency will be once again in the center of focus with a lot of interesting macro publications that are due. Meanwhile, the dollar steadied as the market has already priced in a rate hike in June. With no major US data in the calendar, it could be a week of other currencies.

Australia - Employment report (Thursday, 2:30 am BST)

The AUD has been one of the weakest currencies among G10 recently due to the weakness of the commodity market and weaker data from the Australian economy. Retail sales disappointed and showed that the economic growth could remain muted. On the other hand, the labor market was quite strong and that allowed the RBA to stick to its neutral outlook. If this changes, however, the central bank could become more dovish, thus weighing on the AUD.

United Kingdom - CPI (Tuesday 9:30 am BST), Employment report (Wednesday, 9:30 am BST), retail sales ( Thursday, 9:30 am BST)

Each of the reports could change the outlook for the currency, beginning with the CPI on Tuesday. The Bank of England acknowledged that a rise in inflation could hurt consumers (watch out for retail sales on Thursday),thus leading to a slower economic growth. That is why it said that the overshooting of inflation target won’t be tolerated for long and that the bank could act if needed. The Bank’s recent forecasts assume a rate hike around Q4 2019, but if inflation accelerates sharply, that could change. Employment report, particularly data on wages, could be important too as Mark Carney indicated that wages growth will be taken into account while deciding on interest rates. With such calendar there’s no doubt that the volatility on the pound could rise in upcoming days.

Canada - CPI, Retail sales (Friday, 1:30 pm BST)

Canadian dollar weakened on falling prices of oil, potential trade wars and on the negative outlook for the housing market. Such mix has led to an important technical breakout and pushed the USDCAD to yearly highs. A deterioration in other macroeconomic reports could be too much for the Bank of Canada that meets next week. In such scenario, a dovish surprise that could weigh on the CAD shouldn’t be ruled out.

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 The British Pound poster a correction after a dovish Bank of England, but weaker data from the US caused a nice rebound on the GBPUSD. A solid streak of data could finally lead to a break above 1.30. source: xStation5

 

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