June 4– 8: Forex Week Ahead – Dollar Inches Up on Hawkish Policy Sentiment
Arslan Butt • 4 min read
On Friday, the greenback finally gained some support following better than expected employment datawhich prompted traders to raise bets on the Fed interest rate hike sentiment. The Federal Open Market Committee (FOMC) is due to release its‘ policy decision on July 13. Speaking about forex trading signals, the FX Leaders team did an excellent job in securing 450 pips last week.
The upcoming week is also loaded with high impact economic events which includes RBA Rate Statement, ECB President Draghi and many more macroeconomic events. Here’s what to expect from them…
Watchlist – Top Economic Events This Week
Monday – June 04
The U.S. employment report was quite surprising as the unemployment rate slipped to 3.8% from 3.9% forecast and the U.S. economy added 223K jobs in comparison to the 189K forecast. All this is leading towards the stronger dollar. On Monday, Asian investors may start pricing in better than expected labor report from the United States. Although, we don’t have much from the United States, the dollar is likely to remain supported on Monday.
AUD – Retail Sales m/m
It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The figure is due to be released at 1:30 (GMT) with a forecast of 0.3% vs. 0.0% beforehand.
GBP – Construction PMI
Fellas, it’s a leading indicator of economic health – businesses react quickly to market conditions and their purchasing managers perhaps hold the most current and relevant insight into the company’s view of the economy. This typically brings 30 -50 pips in the market. The construction PMI seems to show a slight drop from 52.5 to 52.
Wait, despite a weaker forecast, we can’t expect a dip in sterling as the PMI figures are compared to abenchmark of 50. Above this, the economy is growing.
Tuesday – June 05
AUD – RBA Monetary Policy Decision
Cash Rate – Investors will be monitoring the RBA (Reserve Bank of Australia) interest rate decision at 4:30 (GMT). The RBA has not changed its cash rates since 2016 and is expected to keep the rate on hold at 1.50%. The Aussie is likely to take a bearish move in case of 1.50% cash rate.
RBA Rate Statement – Phillip Lowe will likely continue asserting the concept that the high value of the currency burdens on reaching the inflation goal. Any change in the tone may move the Aussie. But expectations are very low for any kind of move led by a change in monetary.
However, it would be interesting to see if the Bank discusses global trade tensions in its‘ statement as the tariff on China is also leaving its‘ marks on Australian growth.
EUR – ECB President Draghi Speaks
At 13:00 (GMT), the ECB’s President Draghi is due to participate, along with former ECB President Jean-Claude Trichet, in a panel discussion titled “Two Presidents’ Talk” at the ECB’s 20th-anniversary eventin Frankfurt.
Since Mario Draghi will not be specifically addressing the policy matters, the chances of volatility remain low.
USD – ISM Non-Manufacturing PMI
Throughout the first quarter of 2018, the U.S. services PMI figure has remained quite mixed. In Feb, the figure surprised the market with a massive jump from 55.9 to 59.9 and in May it fell to 56.8. I simply love to trade this divergence and I hope you too.
Anyways, the data is expected show a slight gain from 56.8 to 57.9. I think most of the positivity is already priced in and the market may not take much impact. Yet, it’s worth watching for any surprise.
Wednesday – June 06
AUD – GDP q/q
The Australian Bureau of Statistics will be eyed for Australian GDP data at 1:30 (GMT). The Australian economy has been suffering from weaker economic growth and after the trade war fears between China and the U.S., the market will be interested to see how GDP performs.
Anyhow, the analyst’s forecast is quite positive as Australian economy is expected to grow at the rate of 0.8% vs. 0.4% in past.
CAD – Trade Balance
Trade Balance is a difference in value between imported and exported goods and services during the reported month. The Canadian economy is also an export-oriented and most of it’s living from the foreign exchange. Most of their income comes from the exports of Crude Oil but due to increase of supply oil and the drop in price, the Canadian trade balance is likely to fall to -2.1B vs. -4.1B previously.
Thursday- June 07
AUD – Trade Balance
The Australian Bureau of Statistics will releases the trade balance at 1:30 (GMT). Australia is heavily dependent upon the trade export of goods. The more they export, the better it is. The trade balance is expected to be 1.03B vs. 1.53B, which isn’t good for the Aussie.
GBP – Halifax HPI m/m
The indicator will be released at 7:30 (GMT) by the Halifax Bank of Scotland with a forecast of 1.1% vs. -3.1%. It’s a leading indicator of the housing industry health because rising house prices attract investors and spur industry activity.
Newbies, the Halifax HPI is greater than the forecast and the previous figure strengthens the currency.
Friday – June 08
CAD – Labor Market Report
On Friday, Canada’s labor market report will be in the spotlight, especially after the U.S. nonfarm payroll is out and it came out better than expected. It will be an awesome opportunity for us to capture quick pips on the Loonie.
Earlier, the Canadian economy lost 1.1 jobs while economist expected 17.8K new jobs. The Canadian labor market can bounce this month. The unemployment remained at 5.8% for the third month in a row and it’s expected to remain the same in May.
All the best and stay tuned to FX Leaders for exciting trade setups and forex trading signals. Have an awesome weekend.