FX Weekly Outlook: 6/16 – 6/20 (and World Cup Schedule)

FX Weekly Outlook: 6/16 - 6/20

Monday 6/16
Group G Germany vs. Portugal
Group G Ghana vs. US
Group F Iran vs. Nigeria

Eurozone CPI is forecast to be 0.5% on the year for May, which was the original estimate. The core CPI expected to be 0.7%, also as originally estimated. May’s inflation data gave room for the ECB to act, which would maintain bearish pressure on the EUR.
US Empire State Manufacturing Index for June is expected to be 15.2, a drop from the 19.0 reading for May. May’s reading was the highest in 2 years, and even a drop to 15.2 would be the 2nd highest in 2 years.
empire state manufacturing
(source: Forexfactory)
US Industrial Production for May is forecast to have grown 0.6%, after a reading of -0.6% contraction for April.

Tuesday 6/17
Group H Belgium vs. Algeria
Group H Russia vs. Korea
Group A Brazil vs. Mexico

RBA’s Monetary Policy Meeting Minutes will be released. It will cover the June 3rd RBA decision to keep the official cash rate at 2.50%. The last rate change was in July 2013, when the bank cut rates from 2.75% to 2.50%.
UK Consumer Price Inflation (CPI) y/y for May is forecast to be 1.7%, slightly lower than the 1.8% annual inflation rate reported for April. The lower the inflation rate, the more room the BoE has to maintain its current monetary policy. If the inflation rate however edges toward 2.0%, the market will likely move rate hike expectations to earlier in 2015. Governor Carney spooked the BoE doves when he said the bank might raise rates earlier than the markets expected, and the markets expected about mid-2015, so now the expectations will be shifting to early 2015.
German ZEW Economic Sentiment for June is forecast to rise to 35.2 from the 33.1 reading in May. Although this would show a rebound, a 35.2 reading would be the second lowest in 17 months, since January 2013, when it was 31.5.
EU zew economic sentiment June 2014
(source: Forexfactory)
The Eurozone’s ZEW Economic Sentiment for June is forecast to be 59.6 up from the 55.2 reading in May. A reading close to 60 is very positive, as it represents the readings of economic sentiment before the financial meltdown in 2007 and 2008.
US Building Permits is forecast to be 1.07M on an annualized term for May. This is not much different from the 1.08M reading in April, and reflects an increasing trend since the aftermath of the financial crisis.
us building permits
(source: Forexfactry)
US CPI m/m for May is expected to edge down to 0.2% from 0.3% in April. The core reading is forecast to remain at 0.2%. Higher than expected inflation can move FOMC rate hike expectations forward, while low inflation allows the bank to keep rates low for longer.

Wednesday 6/18
Group B Australia vs. Netherlands
Group A Cameroon vs. Croatia
Group B Spain vs. Chile

The Bank of Japan’s Monetary Policy Meeting Minutes will be released at the start of the 6/18 session, which is still the evening of 6/17 in the US. These minutes will explain the latest vote to maintain the monetary stimulus as is, even amid economic improvements.
The Bank of England’s vote to maintain rates early in the month will be revealed. Anything other than a unanimous vote would reflect a shift in the MPC’s policy perspective.
FOMC Statement and Press Conference will probably be the most anticipated event risk this week. The bank is expected to keep rates the same, and continue to taper at the rate of $10B less QE a month from its now $45B/month rate. The market is monitoring for clues on whether a rate hike will come earlier in 2015, or in the second half of the year.
New Zealand’s GDP for Q1 is forecast to have been 1.2%, up from the 0.9% reading for Q4 2013. With NZD-strength returning, it will be important to see strong economic data to support the current rate of rate hikes – 3 rate hikes in a row adding to 75bps – that brought the OCR to 3.25%.

Thursday 6/19
Group C Colombia vs. Côte d’Ivore
Group C Japan vs. Greece
Group D Uruguay vs. England

The Swiss National Bank Monetary Policy Announcement and Press Conference are usually not market movers. The SNB is expected to maintain its key rate near 0% and continue to support the EUR/CHF above 1.20.
UK Retail Sales m/m for May is forecast to have fell, at -0.5% after a strong 1.3% readign in April.
US Jobless Claims is forecast to be 316K this week, similar to the 317K last week. A reading close to 300K or under 300K should point towards a steady job market recovery. We are not quite there, but closer in the recent couple of months vs. the first few months of the year. Overall, since the financial crisis, jobless claims numbers have been trending down.
jobless claims
(Source: Forexfactory)
Philly Fed Manfuacturing Index
is forecast to be 14.3 in June, slightly down from the 15.4 in May. This would still be a relatively positive reading despite a slight drop off from May.

Friday 6/20
Group D Italy vs. Costa Rica
Group E Honduras vs. Ecuador
Group E Switzerland vs. France

German PPI is forecast to have been 0.2% in May, up from -0.1% in April. Wholesale inflation has been low, which gives ECB more room to act. A return to 0.2% or higher for a few months will be needed to suggest inflation steady enough for a rate hike.
BoJ Governor Haruhiko Kuroda will speak. The Bank of Japan has been keeping the stimulus measures open ended. It has mentioned many areas of success this year due to the aggressive stimulus measures, which invites the idea of tapering. First mention of tapering, and you will probably see a surge in the Japanese Yen. It will probably not come on Friday, but always be ready.
Canada’s CPI m/m in May is expected to have been 0.2%, down from the 0.3% in April. The core CPI is expected to remain at 0.2% on the month.
Canada’s Retail Sales m/m in May is forecast to have rebounded to a growth of 0.4%, after a -0.1% reading in April. The core retail sales reading is also expected to rise to 0.4% from the 0.1% in April.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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