Navigating the Economic Landscape: Key Events and Their Impact on Trading Opportunities This Week (June 17-21)
As we dive into another busy week filled with economic events, it’s crucial to sift through the noise and identify what might actually present tradable opportunities. Despite the numerous events on the calendar, many of them might not yield significant market movements. Here’s a detailed look at the week ahead and what you should keep an eye on.
Central Bank Speak and Policy Decisions
This week is packed with speeches from central bank officials. These could shake up the markets if unexpected statements come out, though usually, they don’t reveal much new information.
RBA Policy Decision (Tuesday, June 18)
The Reserve Bank of Australia will announce its policy decision on Tuesday, June 18. Given the recent economic data for Australia, which includes slightly higher-than-expected inflation and an uptick in unemployment, it’s unlikely the RBA will change its policy. The market expects a hold, with the first rate cut not anticipated until April next year. So, this event probably won’t move the markets much.
ZEW Economic Sentiment for Germany (Tuesday, June 18)
On Tuesday, June 18, keep an eye on the German ZEW Economic Sentiment and Current Conditions reports. Negative sentiment around the eurozone, especially due to the European parliamentary elections and France’s surprise election, has been weighing on the euro. Analysts expect this sentiment to persist. However, if the ZEW data shows improved German sentiment, it could lift the euro, though rally sellers might limit this move. A positive surprise here could also boost the euro against the pound, especially with the Bank of England’s meeting on Thursday.
US Retail Sales (Tuesday, June 18)
US retail sales data is due on Tuesday, June 18. Historically, this data point is volatile and prone to revisions, making it less attractive for trading. Given the current focus on risk sentiment, retail sales might not move the markets significantly.
UK CPI (Wednesday, June 19)
One of the most anticipated events this week is the UK Consumer Price Index (CPI) data on Wednesday, June 19. This print could be the most tradable event, especially if it surprises to the downside. At the Bank of England’s last interest rate meeting, Deputy Governor Ramsden joined Dhingra in advocating for a rate cut. If more members follow suit, particularly if inflation prints lower than expected, the pound could drop significantly. The CPI services print, previously at 5.9%, is crucial. Analysts expect the core CPI to fall to 3.5% and the headline CPI to 2%. Any surprise to the downside could trigger a substantial move lower for the pound.
New Zealand GDP (Thursday, June 20)
Early on Thursday, June 20, New Zealand’s GDP data will be released. Recent disappointing PMI and services data suggest potential downside risks. Given the stretched long positions in the Kiwi, a downside surprise could present a shorting opportunity.
SNB Policy Decision (Thursday, June 20)
The Swiss National Bank’s (SNB) policy decision on Thursday, June 20, is another key event. The Swiss franc has strengthened recently due to comments from SNB’s Jordan about upside inflation risks. Currently, short-term interest rate markets are pricing in a 79% chance of a cut. A surprise hold could further strengthen the Swiss franc, making this event critical to watch.
Bank of England Policy Decision (Thursday, June 20)
The Bank of England’s policy decision, also on Thursday, June 20, probably won’t create significant market movements. With no press conference scheduled, the focus will be on the vote split and the statement. Unless the CPI data presents a major surprise, this decision is likely to be a non-event. The decision will be closely watched for any changes in the vote count favoring a rate cut. If more than two members vote for a cut, it could significantly impact the pound, which has recently shown strength in the CFTC report but remains vulnerable to a dovish shift.
US Initial Jobless Claims (Thursday, June 20)
Thursday, June 20, will also see the release of US initial jobless claims. Last week’s significant increase will be scrutinized to see if this trend continues. However, like retail sales, its impact might be muted if political risks dominate market sentiment.
Flash PMI Data (Friday, June 21)
On Friday, June 21, we have German, Eurozone, UK, and US flash PMI data. Divergences between the UK and the Eurozone could provide opportunities, particularly for the euro against the pound. The US PMIs will be watched in the context of the Fed’s recent stance on inflation and interest rates, which has supported the dollar. Political uncertainty might limit tradability if it remains high.
Japanese Inflation Data (Friday, June 21)
Friday will also see the release of Japanese core CPI data. A significant upside surprise could prompt the Bank of Japan to consider a rate hike in July, potentially moving the Japanese yen. However, given the Bank of Japan’s typically slow response, this would need to be a substantial surprise to have a significant impact.
Conclusion
While there are numerous events lined up this week, the ones likely to present the best trading opportunities are the UK CPI, the SNB policy decision, and potentially the PMI data, depending on how political sentiment evolves. As always, stay vigilant and be ready to adapt your trading strategies based on the unfolding economic and political landscape.
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