Summary:
- IFO survey and new home sales are the most important releases for today
- RBNZ will decide on interest rates on Wednesday
- EMU inflation along with Canadian GDP will end this week
Admittedly, the first day of this week offers just a few macroeconomic readings, the upcoming days should bring much more to digest for investors. Before we move to the full weekly calendar let us come forth with today’s prints including German IFO survey and US new home sales - both could potentially influence the EURUSD.
In case of the former (9:00 am BST) market expectations suggest another deceleration to 101.7 from 102.2 in June, and at the same time the assessment of current and future business conditions is expected to deteriorate to some extent. In turn, US new home sales (3:00 pm BST) ought to show a subtle pick-up to 667k in May from 662k. Notice that risks in the coming months might be tilted to the downside given that the Federal Reserve keeps raising interest rates in a gradual fashion. In the meantime, the Chicago FED activity index will be released (1:30 pm BST) where the consensus points to a slowdown in May to 0.3 from 0.34.
What to watch next?
Tensions between China and US are still driving the markets. While the trade spat between world’s two biggest economies is drawing the most of attention it is easy to forget about other relevant figures in the calendar. The European inflation reading is unquestionably the most important data piece scheduled for next week as ECB is slowly preparing to tighten its policy. On top of that, we will be offered a monthly GDP report from Canada as well as a RBNZ interest rate decision.
RBNZ decision ( Wednesday, 10:00 pm BST): The latest RBNZ meeting produced a dovish message as the central bank revised down inflation forecasts and Governor Adrian Orr suggested that despite ongoing monetary tightening around the world the New Zealand economy may actually need a rate cut next year. The upcoming RBNZ meeting will be closely watched by traders as they wonder whether policymakers from the Antipodean country reinforce their dovish message or not. No change to the level of interest rates is expected. Affected markets: NZDUSD, AUDNZD.
CPI inflation from EMU (Friday, 10:00 am BST): The statement following the latest ECB decision could be viewed as hawkish as European policymakers decided to terminate the QE programme once the year ends. Nevertheless, Mario Draghi managed to cool investors’ heads during the press conference saying that no rate hike will take place until the second half of 2019. Head of the ECB said that he is aware that underlying inflation in the euro zone is accelerating and we will have a chance to see if he is right when preliminary CPI reading from EMU is released on Friday. Affected markets: BUND10Y, EURUSD.
Canadian GDP report (Friday, 1:30 pm BST): After a minor decline in January Canada maintained quite decent GDP growth in February and March. Along with inflation hovering above the BoC target and the unemployment rate falling to 5.8% we get quite a rosy picture of the Canadian economy. The odds for a rate hike during July’s meeting are sitting a notch below 55% (lowered in the aftermath of disappointing inflation and retail sales) therefore another solid GDP reading may be conclusive. Affected markets: EURCAD, USDCAD.
Technically the EURUSD managed to bounce off the support twice, and therefore at least some of bulls might hope for a rebound continuation. Source: xStation5
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