The Week Ahead: 12-16 June 2017

The British pound was sharply lower Thursday night after the shock UK election news resulted in a strong 2% sell off with Sterling tumbling to an eight-week low. The unexpected result May and her conservative party felt resulted in the loss of its majority in parliament after the national election which added to political risks surrounding the upcoming Brexit negotiations, due to start on June 19. Sterling found some support as reports that UK Prime Minister Theresa May was seeking a deal to form a government with support from Northern Ireland’s Democratic Unionist Party, known as the DUP began to filter through.

The Euro was a touch lower against the dollar, with EUR/USD slipping 0.13% just a day after the European Central Bank cut its inflation forecasts, but dropped its guidance that interest rates may be cut again. ECB chief Mario Draghi said the cuts were mainly due to lower oil prices. The central bank raised its growth forecasts for the next few years, saying it now expects gross domestic product to rise by 1.9% this year, up from 1.8% expected back in March. Draghi also said risks to the growth outlook are now “broadly balanced”, dropping the ECB’s previous warning that risks were to the downside. He added that the euro zone recovery is enjoying “stronger momentum”, and is growing at a “somewhat faster pace than previously expected”.

The US Dollar rose against a basket of the other currencies on Friday as the pound remained sharply lower after British Prime Minister Theresa May’s Conservative Party lost out on its seat majority. On Thursday, attention was on Former FBI Director James Comey, who accused President Donald Trump of firing him in a bid to undermine a probe into Russia’s alleged involvement in the U.S. presidential election, but did not say whether he thought the president attempted to obstruct justice. Despite more negative headlines surrounding Trump US investors appeared to shrug off the news resulting in little movement in prices.

In the week ahead market participants are likely to focus on Wednesday’s US Federal Reserve policy meeting, where the central bank is widely expected to deliver its second rate hike so far this year. Markets will also be watching central bank meetings in the UK to see their response in the aftermath of last week’s elections. Indigo FX has compiled a list of this and other key economic releases likely to affect currency prices.

Monday
11:00     GBP         Inflation Report Hearings
16:30     USD         3-Month Bill Auction
16:30     USD         6-Month Bill Auction
18:00     USD         3-Year Note Auction
18:00     USD         10-Year Note Auction
19:00     USD         Monthly Budget Statement (May)

Tuesday
09:30     GBP         Retail Price Index (YoY) (May)
09:30     GBP         Retail Price Index (MoM) (May)
09:30     GBP         DCLG House Price Index (YoY) (May)
09:30     GBP         Producer Price Index – Output (MoM) n.s.a (May)
09:30     GBP         Producer Price Index – Output (YoY) n.s.a (May)
09:30     GBP         PPI Core Output (MoM) n.s.a (May)
09:30     GBP         PPI Core Output (YoY) n.s.a (May)
09:30     GBP         Producer Price Index – Input (MoM) n.s.a (May)
09:30     GBP         Producer Price Index – Input (YoY) n.s.a (May)
09:30     GBP         Consumer Price Index – YoY (May)
09:30     GBP         Core Consumer Price Index – YoY (May)
09:30     GBP         Consumer Price Index (MoM) (May)
10:00     EUR         ZEW Survey – Economic Sentiment (June)
11:00     USD         NFIB Business Optimism Index (May)
13:30     USD         Producer Price Index (MoM) (May)
13:30     USD         Producer Price Index (YoY) (May)
13:30     USD         Producer Price Index ex. Food & Energy (MoM) (May)
12:30     USD         Producer Price Index ex. Food & Energy (YoY) (May)
13:55     USD         Redbook Index (MoM) (June 9)
13:55     USD         Redbook Index (YoY) (June 9)
16:30     USD         4-Week Bill Auction
18:00     USD         30-Year Bond Auction
20:30     USD         API Weekly Crude Oil Stock

Wednesday
09:30     GBP         Average Earnings excluding Bonus (3Mo/Yr) (Apr)
09:30     GBP         Claimant Count Change (May)
09:30     GBP         ILO Unemployment Rate (3M) (Apr)
09:30     GBP         Claimant Count Rate (May)
11:00     EUR         Industrial Production w.d.a (YoY) (Apr)
11:00     EUR         Industrial Production w.d.a (MoM) (Apr)
11:00     USD         MBA Mortgage Appliications (June 9)
13:30     USD         Retail Sales ex. Autos (MoM) (May)
13:30     USD         Retail Sales ex. Autos (YoY) (May)
13:30     USD         Consumer Price Index Ex. Food & Energy (MoM) (May)
13:30     USD         Consumer Price Index Ex. Food & Energy (YoY) (May)
13:30     USD         Consumer Price Index Core s.a. (May)
15:00     USD         Business Inventories (Apr)
15:30     USD         EIA Crude Oil Stocks Change (June 9)
19:00     USD         FOMC Economic Projections
19:00     USD         Fed’s Monetary Policy Statement
19:00     USD         Fed Interest Rate Decision
19:30     USD         FOMC Press Conference

Thursday
09:30     GBP         Retail Sales ex-Fuel (YoY) (May)
09:30     GBP         Retail Sales (YoY) (May)
09:30     GBP         Retail Sales ex-Fuel (MoM) (May)
09:30     GBP         Retail Sales (MoM) (May)
11:00     EUR         Trade Balance s.a. (Apr)
11:00     EUR         Trade Balance n.s.a. (Apr)
12:00     GBP         BoE Assets Purchase Facility
12:00     GBP         BoE Interest Rate Decision
12:00     GBP         Monetary Policy Summary
12:00     GBP         BOE MPC Vote Cut
12:00     GBP         BOE MPC Vote Unchanged
12:00     GBP         BOE MPC Vote Hike
12:00     GBP         Bank of England Minutes
13:30     USD         NY Empire State Manufacturing Index (June)
13:30     USD         Continuing Jobless Claims (June 2)
13:30     USD         Initial Jobless Claims (June 9)
13:30     USD         Import Price Index (YoY) (May)
13:30     USD         Export Price Index (MoM) (May)
13:30     USD         Export Price Index (YoY) (May)
13:30     USD         Import Price Index (MoM) (May)
13:30     USD         Philadelphia Fed Manufacturing Survey (Jun)
14:15     USD         Capacity Utilisation (May)
14:15     USD         Industrial Production (MoM) (May)
15:00     USD         NAHB Housing Market Index (June)
15:30     USD         EIA Natural Gas Storage Change (Jun 9)
21:00     USD         Total Net TIC Flows (Apr)
21:00     USD         Net Long-Term TIC Flows (Apr)

Friday
10:00     EUR         Labour Cost (Q1)
10:00     EUR         Consumer Price Index (MoM) (May)
10:00     EUR         Consumer Price Index – Core (MoM) (May)
10:00     EUR         Consumer Price Index – Core (YoY) (May)
10:00     EUR         Consumer Price Index – (YoY) (May)
n/a          GBP         30-y Bond Auction
12:00     GBP         BoE Quarterly Bulletin
13:30     USD         Building Permits Change (May)
13:30     USD         Building Permits (MoM) (May)
13:30     USD         Housing Starts (MoM) (May)
13:30     USD         Housing Starts Change (MoM) (May)
15:00     USD         Michigan Consumer Sentiment Index (June)
n/a          USD         Labour Market Conditions Index (May)
18:00     USD         Baker Hughes US Oil Rig Count
2030       EUR         CFTC EUR NC Net Positions
20:30     USD         CFTC Oil NC Net Positions
20:30     GBP         CFTC GBP NC Net Positions
20:30     USD         CFTC Gold NC Net Positions
20:30     USD         CFTC USD NC Net Positions