Your Weekly Fundamental View (12-16 June)

Červen 12, 2017 14:00

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Need to Know

The current trading week will be primarily focusing on the statement from the FOMC on the US monetary policy, which also includes an interest rate decision and a press conference. Other weekly highlights are the interest rate decisions in Switzerland, Japan, and the UK as well as the subsequent monetary policy statements issued by the Central Banks of Switzerland (SNB), Japan (BOJ), and the UK (BOE).

Coming Up

The German ZEW Economic Sentiment Announced on Tuesday, 13 June

This particular index is based on a survey of German institutional investors and analysts that rate the economic outlook over the period of six following months. The rate above 0 indicates optimism, and below 0, pessimism.

Why should you care? The previous ZEW economic sentiment index is 20.6, whereas the forecast currently has it at 21.5 (*).

USD Retail Sales and Inflation Rate Released on Wednesday, 14 June

The retails sales report shows the change in the total value of sales at the retail level, whereas the inflation rate indicates the change in the price of goods and services purchased by consumers.

Why should you care? The previous retail sales figure is 0.4% with the forecast at just 0.1% (*). The previous inflation rate is 2.2%; the forecast expects the figure to decrease to 2.0% (*).

US Decision on Interest Rate and FOMC Statement on Wednesday, 14 June

The Federal Reserve (FED) is expected to release its decision on the interest rate. In addition, the Federal Open Market Committee (FOMC) will add its economic projections and statements. Last but not least, the FOMC will also hold a press conference.

Why should you care? The current interest rate remains at 1%, but is forecasted to increase by 0.25% to 1.25% (*). The decision is expected to impact the US Dollar in the first place as well as the stock and financial markets in general. Usually higher rates attract demand for the local currency. Traders should also pay special attention to the Central Bank communications as they offer hints about future policy decisions that could impact price movement.

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Source: US Interest Rate Decisions

Swiss National Bank (SNB) Interest Rate Announced on Thursday, 15 June

The Swiss National Bank (SNB) is expected to announce the new interest rate level for Switzerland. It also will include a monetary policy assessment and press conference to offer a prepared statement before addressing questions from the press.

Why should you care? The interest rate is a key part of the monetary policy and a critical factor in the currency value. Higher interest rates are more attractive and increase demand, whereas lower interest rates are quite the opposite. The SNB is currently offering negative rates and is expected to keep them: the previous rate and the forecasted figure remain at -0.75% (*).

UK Interest Rate Decision Released on Thursday, 15 June

The Bank of England (BOE) will announce the future interest rate, release the monetary policy summary, and indicate the official voting record of the board members on the rate decision. The BOE Governor Carney is also expected to speak later the same day at the Mansion House Bankers and Merchants Dinner in London.

Why should you care? Monetary policy decisions of the Central Bank have a considerable impact on the related currency and financial markets, in this case, the Great British Pound (GBP) and the stock market (FTSE). Both the interest rate of 0.25% and the Quantitative Easing of GBP 435B are forecasted to stay the same (*).

Bank of Japan (BOJ) to Announce Interest Rate Decision on Friday, 16 June

The Bank of Japan (BOJ) is also expected to announce the interest rate level, which is its main operating target. The monetary policy statement tends to overshadow the rate decision as the rate is usually priced into the market.

Why should you care? The statement contains the outcome of the decision on asset purchases, but also provides commentary on the economic conditions of influence. Volatility on all Japanese Yen (JPY) crosses may be high, which could also impact the Nikkei index. The previous rate is 0.1%, with the forecast remaining the same at -0.1% (*).

(*) Admiral Markets – Forex Calendar