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July 23, 2018

IronFX, Weekly Report - Market focus on ECB’s Interest Rate decision & Australia’s Inflation data

In the coming week a number of financial data releases could get the attention of the markets.

This article is originally referred from IronFX News.

Next week’s market movers

  • On Monday, the market’s attention could be on the US Existing Home Sales for June.
  • On Tuesday, Japan’s Manufacturing PMI rate for July, and Eurozone’s PMI data for July. could prove to be the main releases of the day.
  • On Wednesday, Australia’s inflation rates for June the German Ifo Business Climate Index for July as well as the US New Home Sales for June are due out.
  • On Thursday, ECB Interest Rate Decision for June stands out and later on the US Durable Goods Orders for June could grab the market’s attention.
  • On Friday, UK’s Nationwide HPI for June and US GDP for the second quarter of 2018 could be the most important events of the day.

IronFX’s team handpicked the ones which it considers as the most influential and discusses their possible (current) forecasts and their respective effects on various currencies.

Monday, 23rd July

On Monday, in the American session we get the Canadian Whole Sale Sales for May.

The previous reading release in June was at 0.1%. Any reading above that figure should be taken as good news for the CAD while on the opposite any reading below could be taken as negative and could hurt the Loonie.

Later in the American session we get US Existing Home Sales for June. The rate is forecasted to increase and reach 5.44M compared to previous reading of 5.43M while the Existing Home Sales (MoM) are expected to increase to +0.5% mom from previous reading of -0.4% mom.

Should the actual rates meet the forecast we could see the USD caught in mixed financial data, as it would indicate the monthly rate increased but the overall reading has a minor decrease in home sales for June.

Please be advised that Existing Home Sales are a very important indication of a healthy economic outlook.

Tuesday, 24th July

On Tuesday, we get a number of PMI’s from Asia and Europe.

Early in the Asian session, the Japanese Manufacturing PMI for July is to be released.

The rate has no forecast at the moment, however, the previous reading was at 53.0.

A higher figure than the one previously released could be taken as positive for the JPY.

In the European session we get Germany’s, France’s and Eurozone’s preliminary PMI’s for July.

Please note all European PMI’s are set to drop and should the actual readings meet the forecast we could see the common currency weakening as such readings could be regarded as a continuation of Eurozone’s lukewarm to negative financial indicators.

Please note, on the same day the EU Finance Ministers Meeting will take place but the start time is undisclosed.

Wednesday, 25th July

On Wednesday, in the Asian session we get Australia’s inflation data for June.

The quarterly CPI rate is forecasted to accelerate and reach +0.5% yoy compared to previous reading of +0.4% yoy as well as the yearly CPI rate which is forecasted to reach +2.2% yoy compared to previous reading of +1.9% yoy.

Should the actual rates meet the forecasts we could see the Aussie strengthening.

We would also like to stress the fact that in the previous week Australian labour market report came out impressively strong for June.

It was noted that with the labour supply still growing, less upward pressure was applied on wages and inflation so RBA is not expected to rate hike anytime soon.

In the European session we get German Ifo Business Climate Index for June.

The rate is forecasted to drop at 101.5 from previous release 101.8.

Should the actual rates meet the forecast we could see the common currency weakening somewhat, though it must be noted that due to the small decrease the market could perceive it as a muted event. However, any greater reading both negative and positive could create volatility for the EUR.

In the US session we get the US New Home Sales rate for June.

The US New Home Sales rate is forecasted to drop and reach 0.670M compared to previous reading of 0.689M.

Should the outcome be the same with the forecast, the greenback could weaken. However, the difference is not so significant, so the reaction could be rather minor.

Thursday, 26th July

On Thursday, in the European session, ECB will announce its interest rate decision.

The bank is widely expected to remain on hold at 0.00%, as EUR OIS imply a probability for the bank to remain on hold at 97.61%.

If the interest rate decision comes out as expected, we could see the market’s attention shifting to the accompanying statement and the following press conference.

Should there be any signs of the bank starting to unwind its QE program as suggested by ECB officials previously, we could see the common currency gaining ground.

Please be advised that the interest rate decision and the following press conference may leverage volatility on EUR crosses.

It is expected that the asset purchases could end this year, as announced, and the market doesn’t expect an update on the policy path until March.

In the US session, we get the US New Home Sales for June. The forecast implies in increase to +2.5% from a previous count of -0.4%. Please be advised the USD could strengthen on the release of the news, should the forecast be realized.

Friday, 27th July

On Friday, early in the European session we get UK’s Nationwide HPI readings for July.

The UK’s yearly Nationwide HPI rate previous reading of +2.0 % yoy while the monthly Nationwide HPI headline CPI rate’s last reading was +0.5% mom.

Should the release exceed the previous readings, we may see the GBP gaining some momentum.

However, most of the attention in the UK is placed on the Brexit as it is turning out to be a very difficult topic to deal with. The UK remains divided on how the matter should be dealt with and so Cable has been kept down lately.

In the American session we get the US GDP (QoQ) rate for July. This is the most significant event for the day and the US GDP (QoQ) rate is forecasted to accelerate to +4.1% qoq compared to previous reading of +2.0% qoq. Should the headline rate’s actual reading meet the forecast and the US GDP (QoQ) rate accelerate as well, we could see the greenback getting some support.

In addition and regarding the US, during the past week Powell said the Fed will continue to slowly raise interest rates “for now’’ in order to keep inflation near target amid a robust conditions in the U.S. labour market.

Original Source: IronFX News

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