Weekly Review and Outlook 12th June 2017

Mark NugentJune 2017, Trading Plan

Weekly Forex Review – Week Commencing 5th June 2017

Economic Calendar

Over the weekend:

Another terror attack, this time in London.

Monday

UK Services PMI misses at 53.8 vs an expectation of 55.1.

Tuesday

RBA Interest Rate Decision 1.5% vs. Exp. 1.5% (Prev. 1.5%). RBA reiterated that steady policy is consistent with growth and inflation targets, while it also commented that labour market indicators remain mixed and that tighter regulation is to decrease risks from increasing debt. (Newswires)

Survation Poll conducted on June 2nd-3rd showed UK Conservatives at 41.5% vs. Labour 40.4% (Prev. 40% vs. 39%). (Newswires) Note, that the survey was carried out on Friday and Saturday before the London Bridge attack.

Wednesday

We have AUD GDP beating expectation at 0.3% vs 0.2%.

Latest Opinium UK election poll showed Conservatives at 43% vs. Labour at 36% (Prev. 43% vs. 37%). (Twitter)

Crude oil inventories rose by 3.3m barrels vs an expectation of a drawdown of 3.1m barrels.

Former FBI Director Comey’s prepared statement was deemed less detrimental than some had feared.

Thursday

The ECB states that policy rates remain at present levels for an extended period of time; removes the word ‘lower’ from guidance.

ECB President Draghi states that risks to the growth outlook are broadly balanced

– Interest rate decision as expected – no change at 0.00%.
– The governing council confirm net purchases of EUR 60bln and are intended to run until the end of Dec’17, or beyond if necessary
– Underlying price pressures remain subdued
– Measures of underlying inflation remain low and inflation is only set to rise gradually
– No dissent regarding changes in policy statement
– QE tapering was not discussed at all

ECB inflation forecasts: 2017 1.5% (Prev. 1.7%), 2018 1.3% (Prev. 1.6%), 2019 1.6% (Prev. 1.7%)

ECB GDP forecasts: 2017 1.9% (Prev. 1.8%), 2018 1.8% (Prev. 1.7%), 2019 1.7% (Prev. 1.6%)

Comey said he took it as an order when Trump told him to drop the Flynn investigation.

Conservatives are largest party in UK election, but do not have an overall majority. They will attempt to put a government together, as is their right as largest party.

Friday

UK Manufacturing production misses badly (0.2% vs 0.8% expectation).

Market Reaction

The market was cautious all week with major risk events on Thursday being a major factor. The USD was flat until it rose on Friday, driven by the election-inspired drop in the GBP. There was little movement in US equities until Friday, when the S&P500 hit a new intra-day all-time high, the Dow made a new all-time closing high and the Nasdaq dropped significantly for reasons as yet unknown. Oil dropped to support, gold fell and the 10 Year US Treasury yield was up slightly over the week. UK equities dropped into the election. Post-election, the FTSE rose on the weaker GBP and the FTSE250 spiked down before ending the day slightly up. AUD anbd NZD continue their seemingly unstoppable appreciation.

Trading Plan

Four trades closed last week. Trade 30 (EURAUD long) closed at breakeven. Trades 31 and 33 (both GBPUSD long) closed at breakeven. Trade 32 (FTSE250 long) closed for a loss of 0.35%. Month-to-date performance is 1.00% and year-to-date performance is 10.2%.

Weekly Forex Outlook – Week Commencing 12th June 2017

Economic Calendar

Over the weekend:

Nothing of note.

In the news:

Political uncertainty further muddies outlook for UK economy
Trump’s economic agenda is almost dead

Mon –

Tues – UK CPI.

Wed – CNY Industrial Production; GBP Average Earnings Index; US CPI and Retail Sales; US FOMC Economic Projections, Statement, Funds Rate and Press Conference; NZ GDP.

Thurs – UK Retail Sales; UK BoE Super Thursday

Fri – Japan Monetary Policy Statement, Policy Rate and Press Conference; Europe – Final CPI.

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Here is your Weekly Review and Outlook video.

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