Jun 12 • Morning Roll Call • 1703 Views • Comments Off on MORNING ROLL CALL

The FOMC (USA Fed) reveals its interest rate decisions, whilst a raft of UK official hard data and the Bank of England’s rate decision, will be of interest, coming so close after an inconclusive election

The main focus of the week is undoubtedly the USA’s FOMC interest rate decision on Wednesday, with the analysts’ polled predicting the second rate rise of 2017, to 1.25%. This release, coming at 18:00pm London time, should be diarised as it’s undoubtedly the highest impact event over the coming week, which could immediately effect the value of the U.S. Dollar, versus its peers.

Also, traders should pay key attention to any official data emanating from the UK, Brexit is still an issue and it’s now come into sharp focus again, given the UK’s election resulted in what’s termed a “hung parliament”, a government that will be crippled by indecision and its lack of ability to make any forthright decisions over the length of its term.

Friday’s inflation figure for the Eurozone, with a monthly figure predicted to reveal a negative -0.1 reading, could cause movement in the euro, as investors may speculate that the ECB will have the capacity and motivation to lower rates and or increase the current asset purchase scheme, in order to stimulate growth.

Monday is an extremely quiet day for the fundamental economic news calendar, we have machine tool orders from Japan, forecast to come in at a similar growth level YoY, at circa 34%. Thereafter, we need to wait until the USA issues its monthly budget statement, scheduled to be published at 18:00 pm London time, the forecast is for May’s deficit to rise to -$87b, from -$52b in April.

On Tuesday morning, the UK’s official statistics body the ONS begins to publicise several key inflation data reports, fifteen in total; starting with CPIH inflation in the UK, forecast to come in at 2.6% growth annually, whilst another house price increase release forecasts annual growth of 3.6% for April. CPI (consumer) inflation is predicted to reveal annual YoY growth of 2.7%, no change from the previous YoY figure. RPI (retail) inflation is forecast to come in at 3.8%. The German ZEW June survey for economic sentiment, is predicted to come in at 21.8, ahead of 20.6 reading recorded in May.

Wednesday begins with Chinese economic data; retail sales are forecast to rise by 10.3% annually, industrial production in China is predicted to rise to 6.6% year on year. Japan’s annual industrial production is forecast to remain similar to April’s figure, of 5.7% growth. As attention turns to Europe, German CPI data is published; the prediction is for an unchanged reading of 1.5%. From the UK we’ll receive figures on unemployment, scheduled to come in at 4.6% of the workforce, job creation for the first quarter is forecast to show 125k new jobs created, in the first quarter of 2017. Weekly earnings (measured YoY) are predicted to remain at 2.4%, whilst excluding bonuses the salary figure is forecast to come in far less, at 2.0%. Eurozone industrial production is estimated to come in at 1.4% in April, falling from 1.9% in March.

Attention then turns to North America; Canada publishes house price inflation through a national bank, year on year it’s forecast to come in at 13.4% YoY. The USA then publishes a raft of data; CPI inflation is predicted to come in at 2.0% annually, when measured in May. Advanced retail sales are predicted to come in at 0.1% in May, falling from 0.4% in April. Thereafter, the main economic calendar news of the day is revealed, the USA FOMC (Fed) decision on interest rates. The consensus amongst economists’ polled is for a change in the current main interest rate of 1.00%, to 1.25%. The day finishes with New Zealand’s annual GDP, forecast to come in at 2.7% in the first quarter of 2017.

Thursday begins with Australia’s unemployment rate, forecast to come in at 5.7% as the annual gauge of those out of work. Then attention turns to the UK’s economy; retail sales growth should come in at 1.9% for May, from the 4.5% figure recorded in April. The UK’s central bank the BoE will reveal its monetary policy concerning the asset purchase scheme; predicted to remain constant at £435b, whilst the base interest rate decision is forecast to stay unchanged at 0.25%. The corporate bond rate is estimated to reveal a target of £10b a month. In the evening at 20:00 Mark Carney, the governor of the UK’s Bank of England will deliver a speech at Mansion House, of particular relevance given the UK’s recent inconclusive general election and the upcoming Brexit negotiations.

In the afternoon attention turns to the USA, the Empire Fed manufacturing reading is published, forecast to come in at 5 for June, versus the previous month’s figure of -1 in May. Initial weekly jobless claims are forecast in at 241k, versus the 245k recorded last week. The Philadelphia Fed reading is forecast to come in at 25, versus May’s reading of 38.8. Industrial production is expected to fall to 0.2% growth in May, from the 1.0% recorded in April. Manufacturing is also predicted to fall; to 0.2%, from 1%.

Friday witnesses the Eurozone CPI data published, scheduled to reveal a fall from 1.9% YoY to 1.4%. The monthly figure is forecast to come in at -0.1% from 0.4% in April. In the afternoon trading session in the USA, the first medium to high impact data revealed is housing starts, predicted to come in at 4.1% growth in May, ahead of the April figure of -2.6%. The university of Michigan confidence reading for June, is expected to remain unchanged at 97.1.

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