During last week volatility in the financial markets was high and demand for the safe-haven currencies and oil has grown. Poor data on HFPR released on Friday before last, and the following the speech by US Fed president, Mrs. Janet Yellen last Monday, (which did not clarify plans for the future monetary policy), has decreased expectations of the interest rate hike in June.
The chances of the increase are vanishing and are now close to 20%. Last Thursday, Reserve Bank of New Zealand left interest rate at the level of 2.25%, which caused sharp rise in NZD/USD. The pair reached annual highs at the level of 0.7135. Interest rate of New Zealand has remained one of the highest among the 8 major currency pairs and this fact increases attractiveness of the NZD among investors and traders of “carry trade”. Risk free annual profit of 2.25% is better than the zero profit on the Euro or the Yen or Franc.
The Pound is in demand due to the mixed forecasts and different results of the opinion polls about the UK membership in the EU. According to ORB survey for The Independent, 55% of the respondents were in favor of the British exit from the EU. The Pound and the pair GBP/USD fell last week.
Price of oil has reached new annual highs. Crude oil Brent has grown up 52.80 USD per barrel after the news of the decrease in the oil inventories in the USA and amid continuing disruptions of oil supply in various regions of the world. The key event of this week is interest rate decisions by the US Fed on Wednesday at 20:00 (GMT 2). Following poor data on NFPR for May, the rise in the interest rate in unlikely. On Wednesday at 20:30 Mrs. Yellen will give her comments on the adopted decision. If her speech will contain hints on the soft monetary policy in the future, the USD will weaken. Market volatility is expected to be high at this time period.
During this week, Central Banks in the UK, Japan and Switzerland will adopt their interest rate decisions.
The financial news of this week will also include:
03:00 (GMT 2) – Consumer price inflation in Australia for June. High level of this index will be favourable for the AUD. Previous index was at the level of 3.2%.
04:30 – Volume of industrial production in Japan for April. This index is the main indicator of the state of manufacturing sector of Japan. Previous index was at the level of -3.5%.
10:30 – British price indices for May. They show inflation rate in the country. CPI is the key inflation index and the indicator of changes in the purchasing level in the country. Previous CPI was at the level of 0.1% (0.3% on the annual basis). Forecast is the rise of 0.4% on annual basis.
11:00 – Industrial production level of Eurozone for April and employment rate for Q1.
14:30 – US indices of export and import and retail sales for May, which is the main indicator of consumer spending and important indicator of inflation rate in the USA. Previous index was at the level of 1.3%.
22:30 – American Petroleum Institute (API) will issue report on changes in oil reserves for the last week.
08:00 – Press-conference of the Bank of Japan. The head of the Bank Mr. Kuroda will assess the prospects of price dynamics and monetary policy of the Bank.
11:00 – Trade balance in Eurozone for April. Positive index and the rise in surplus will be favourable for the Euro.
15:15 – Industrial production output and capacity utilization in the USA for May. This index will show economic growth. Positive index may boost the rise in inflation, which will be favourable for the USD.
16:00 – Price index for dairy products from Global Dairy Trade.This index has impact on the rate of the NZD. Previous index was at the level of 3.2%. The rise in the index will be favourable for the NZD.
16:30 – US Department of Energy will issue the data on oil inventories in the US storehouses.
20:00 – US Fed interest rate decision. Currently, the interest rate in the USA is at the level of 0.5%. Chances of the interest rate hike are very low.
20:30 – The head of the US Fed Janet Yellen will give her comments on the monetary policy of the USA and interest rate decision., which will increase volatility in the market.
00:45 – New Zealand’s GDP for Q1. This index is the main indicator of activity and stability of the national economy. The rise in the index will be favourable for the NZD.
01:40 – Speech of the head Canadian Central Bank, Mr. Steven Poloz.
03:30 – Employment rate in Australia for may. The rise in the index will have a positive impact on consumer consumption, which helps improve economic growth in the country.
05:00 – Interest rate decisions of the Bank of Japan and press-conference on this issue. If the rate is maintained at the present level or decreased, it will have a negative impact on the JPY. Current level of the interest rate is -0.1%. 06:30 – SNB’s report of the financial stability in the country.
09:30 – Interest rate decision of the Swiss Bank. If the interest rate will be left at the current level or decreased, it will be unfavaurable factor for the SHF. SNB keeps indicating its adherence to the soft monetary policy and possibility of intervene in the currency market. Press conference of SNB.
10:30 – UK retail sales data for May, which is an indicator of consumer spending and inflation.
11:00 – Consumer price index in Eurozone for May, which is a key indicator of inflation rate. In case of the positive index the EUR will grow. Investors will closely monitor the indices. Any deviation from the forecast will cause the increase in volatility.
13:00 – Interest rate decision of the Bank of England. Changes are not expected. However, the following up comments will indicate the plans for the interest rate and monetary policy. Current interest rate is at the level of 0.5%.
14:30 – primary and secondary applications for the unemployment benefits in the USA for the last week. Previous number of initial applications was 264 000. The rise of applications will be unfavourable for the USD.
16:00 – Housing price index in the USA for June. This index indicates sales level and prospects for construction.
00:30 – Business activity index in the manufacturing sector of New Zealand (PMI). This index evaluates business conditions in the country. If the index grows above 50, is shows high activity in business and will be favourable for the NZD. Previous index was at the level of 56.5.
14:00 – Meeting of the Council of Finance Ministers of Eurozone.
14:30 – Started home constructions in the USA and the number of construction permits in May. This index indicates dynamics of corporate investments and increases volatility in the USD.
14:30 – Base consumer price index in Canada for May.
17:00 – Speech by Mario Draghi, ECB President. Usually his speech causes the increase in market volatility.