Last week financial markets were volatile after the UK’s decision to leave the EU adopted by the majority of British people. Throughout the week the price of gold has maintained at the highs, reached on the day when this decision was announced.
Since today’s opening session the price of gold is in the positive area against the closing value of last week at the level of 1350.00 USD per ounce.
Volatility in the pairs with the Pound increased last week after the speech by the head of the Bank of England, Mr. Mark Carney last Thursday. Mr. Carney has said that this summer monetary policy in the country requires some easing, which is an indication that the Bank of England can lower interest rates in the near future. This statement triggered further decline in the Pound. Mark Carney has also said that the Bank has some additional tools to support economic and banking system in the country. This statement has added momentum to the index of London stock exchange FTSE100.
At the same time representatives of the US Fed made some statements showing that the Fed monetary policy would be softer than stated earlier. Fed President of St. Louis, James Bullard said on Thursday that the key rate in the US might be raised only once. Futures markets incorporated 17% chance of lowering interest rates in the USA in November, instead of the increase in the rate.
Last week, the price of the USD and Pound went down, while the price of commodities including oil and prices of gold and global stock indices went up.
The key event of this week is the publication of data on new jobs created outside the agricultural sector of the U.S. economy (NFPR) on Friday. Last month, NFPR was below expectations (38 000 new jobs against 160 000 in May). On the day of the release of NFPR for May, the USD fell against the Euro by more than 200 points, which is over 2%. It is expected that NFPR for June will grow by 180.000 new jobs.
NFPR and GDP are the major indices used by the Fed for making interest rate decision.
If NFPR for June will be worse than expected, market expectations of the increase in interest rate will drop and the USD may go down.
The list of important macro-economic statistics and news scheduled for the release this week is below.
11:00 (GMT 2) – Producer price index in Eurozone for May.
15:30 – Business activity index in the manufacturing sector of Canada for June. If the index exceeds the level of 50 it will show positive development in the sector and may trigger the rise in the CAD.
00:00 – Business confidence NZIER for Q2 from the Institute of Economic Research of New Zealand. A month ago this index was at the level of 2%.
03:30 – Retail sales in Australia in May. This index is an indicator of growth of the Australian economy (forecast is 0.3% against 0.2% in April). Australian trade balance of Australia for May (It is expected that the deficit will amount to 1.5 billion AUD).
03:45 – Caixin PMI in the Chinese services sector for June. This index has a strong impact on the financial market, because Chinese economy is the second largest in the world.
06:30 – Interest rate decision by RBA and following up comments. It is expected that the rate will be left 1.75%.
10:00 – Business activity Index in various sectors of European economy for June. If the index goes above 50, the Euro will strengthen; if the index falls below 50 – the Euro will weaken. It is expected that the index will be 52.0.
10:30 – Index of business activity in the British service sector (purchasing managers index PMI). Service sector is an important part of the British GDP. Investors will be awaiting this data, as the UK is a major provider of financial services in the whole world, and soon the UK will begin to withdraw offices of European financial institutions to the continental part of Europe because of Brexit.
11:30 – The Bank of England will issue a report on financial stability, which evaluates prospects for stability in the financial sector, and gives recommends to reduce risks to such stability. The report will be of great interest due to Brexit.
16:00 – Industrial orders in U.S. for May. Forecast is -0.5% against 1.9% in April. After 16:00 New Zealand’s price index for dairy products from Global Dairy Trade is usually released. This index has impact on the NZD.
09:00 – Meeting of ECB and a speech by the head of the Bank, Mr. Draghi. At the press-conference, Mr. Draghi will answer questions on the current economic situation in Eurozone. Usually his comments have strong effect on the Euro and European stock indices.
09:30 – Speech of the Deputy head of the RBA Debelle.
14:30 – US trade balance for May.
15:45 – Markit PMI in the USA for June.
16:00 – US PMI from ISM for June.
20:00 – Minutes of the last FOMC meeting.
22:30 – American Petroleum Institute (API) will publish report on changes in the U.S. oil reserves for last week.
01:30 – AiG business activity index in the Australian construction sector in June.
02:30 – Speech of the head of the Bank of Japan Mr. Kuroda.
09:15 – The consumer price index in Switzerland in June.
10:30 – Industrial production and production capacity in the British manufacturing sector.
13:30 – Meeting of ECB.
14:30 – Initial applications for unemployment benefit in the USA for the last week.
16:00 – British NIESR for June by the National Institute of economic and social research. This index assesses growth of the British economy in the last three months.
16:00 – Ivey business activity index in Canada for June.
17:00 – US Department of Energy publishes a weekly report on oil and oil products reserves in the US stores.
08:00 – Payment and trade balance of Germany for May.
14:30 – Monthly data of the state of the US labor market for June, including Non-Farm PayRolls (forecast 180 000 new jobs against 38 000 in May), and the US unemployment rate (forecast: 4.8% against 4.7% a month ago).
Investors will await this US news, as it will help to understand Fed’s plans about the interest rates. Positive data may cause the rise in the USD and possibly, the increase in the interest rate. In case of the negative data, the USD will continue to decline.