Weekly trading forecast June 24 - 28

After the volatile trading week focused on monetary policy in major regions, global investors will pay attention to cyclical macroeconomic data, geopolitical talks and the G20 summit in Tokyo this upcoming week. With the final reading of Gross Domestic Product reports in Canada, the United Kingdom and the United States, traders’ sentiment will depend on European and Japanese inflation reports. The Reserve Bank of New Zealand will announce interest rates decision, publishing the economic statement and updating projections for the foreseeable future. The weekly change in U.S. Crude Oil Inventories would affect the price action for WTI Crude and Brent Crude oil prices, which charted strong bullish rally last week. The fixed-income markets will monitor the development in U.S. 10-year Treasury yields and gold prices after the dovish Federal Reserve’s message last Wednesday. U.S. PCE deflator will be the most crucial data for the future monetary policy in the United States.

Monday’s Asian trading session will start with the Reserve Bank of Australia Governor Lowe’s speech about the financial conditions in the country. The Australian dollar bounced off multi-months lows last week on anti-greenback flows, however, the RBA might add selling pressure on the currency if a dovish sentiment was noticed in Lowe’s speech. German IFO Institute will release its monthly economic survey covering Business Expectations, Current Assessment and Business Climate Index. Euro edged higher last week versus the U.S. dollar on short-covering flows, but a weaker-than-expected data could send the single European currency tumbling again. In the United Kingdom, Inflation Report Hearings will start on Monday. The British Pound had recovered part of recent losses versus major currencies, and the Bank of England considered the need to tighten the monetary policy thus inflation might support GBP versus USD (1.28 predicted) and EUR (0.88). Chicago Fed National Activity and the Dallas Fed Manufacturing Index are the most important events in the United States on Monday. Equities’ and bonds’ price action would depend on weekend’s headlines in regards to conflict with Iran and trade talks with China.

New Zealand will release trade balance figures, as well as imports and exports volumes update in May. The year-over-year change is predicted flat at the same negative surplus of -5.8M NZD, while a stronger reading would push the Kiwi soaring versus the Japanese yen. The Bank of Japan will publish monetary policy meeting minutes later on Tuesday. USD/JPY charted the lowest exchange rate in 14 months last week, and the pair could keep falling as the regulator did not express readiness to step in so far. Since the European economic calendar is almost empty on Tuesday, traders’ and investors’ attention will shift to the other side of the Atlantic. In New York, Redbook survey and Housing Starts report will be released, while the main event is going to be CB Consumer Sentiment Index, Housing Starts, Richomd Manufacturing and Services Indexes. The Fed Chair Powell will speak later in the evening, while OPEC will start a two-day meeting with a tentative announcement.

The Reserve Bank of New Zealand will grab traders’ attention on Wednesday as the regulator will publish the interest rates decision and economic statement. So far, analysts expect the regulator to stay pat on rates, while further rhetoric would determine the price action for NZD/USD and NZD/JPY. If RBNZ promised more easing this year, then both currency pairs would lose the ground. Otherwise, the bullish trade would continue as in the past week. German GFK Consumer Confidence and France Jobseekers Total figure will affect EUR/USD. Although ECB promised more supportive measures and a larger TLTRO programme to boost the liquidity, strong data could support the single European currency, especially in the light of weaker greenback. U.S. Core Durable Goods Orders and Crude Oil Inventories - those are the main drivers for the dollar index, the price of oil and USD/CAD on Wednesday. If the data kept softening, USD/CAD could drop to 1.3000 psychological round-figure support in bearish trade as the Bank of Canada is set to hike the interest rates in the country, squeezing the interest rates differential.

Japan’s Retail Sales report should renew the volatility in the Asian trading session on Thursday. New Zealand ANZ Business Confidence is the crucial report for the Kiwi. In Europe, traders would notice a larger impact from the fundamental side as preliminary inflation figures will be published. German Consumer Price Index is the headline event, influencing Eurozone CPI to be released the next day. Among other reports, economists highlight Spanish HICP, Italian Business Confidence, EU Consumer, Services and Industrial sentiment. U.S. investors will monitor the final reading of the Gross Domestic Product in the first quarter of 2019. The market’s consensus is for the report to stay flat at 3.1%, while a weaker reading would cause another sell-off for the greenback across the board as the Federal Reserve will be forced to act much earlier than traders would have expected.

The Japanese yen might be pressured by sellers in case if the Jobs/Application Ratio, Tokyo Core CPI, Industrial Production and Unemployment rate worsened in May. Australian Private Sector Credit is the only significant data for the Aussie traders thus we do not expect AUD/USD and AUD/JPY fluctuating much this week. Nationwide HPI and Gross Domestic Product would affect the price action for Sterling pairs, especially GBP/USD and EUR/GBP. French CPI and Spanish GDP figures will increase volatility for EUR/USD, while the main event of the week is the Eurozone Consumer Inflation report, which will influence the ECB rate decision in July. Pundits predict the headline figure to remain at the same level as per May, however, the global economic slowdown could influence lower inflationary pressure in the Eurozone. The Federal Reserve and global investors will monitor PCE Price Deflator in the U.S. to update expectations on the number of rate cuts by the regulator this year. The U.S. dollar could extend losses versus its major peers.
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