Big week ahead with plenty of important speeches and data.
- US retail sales rise fails to dent chances of a cut in July
- Market to continue to keep a close eye on Tory leadership
On Friday the market was focusing on the US retail sales for a handle on the ongoing interest rate story. U.S. retail sales increased in May and sales for the prior month were revised higher. The headline figure is suggesting a pick-up in consumer spending that MIGHT ease fears the economy was slowing down sharply in the second quarter. However, despite this, the probability of a rate hike cut in July is greater than 80%.
EUR/USD (1.1200) and GBP/USD (1.2600) are at critical low levels, and this week’s USD news could push us lower, OR see a sharp recovery. Drama awaits!
All eyes will be on Wednesday night’s rate decision from the USA, with the accompanying Press Conference expected to give guidance about the path of rates and give the USd some medium-term direction.
In the meantime, Sterling was under pressure as a result of the underlying political uncertainty. Last night’s Channel 4 Conservative leadership candidate debate (minus Boris Johnson) did little to change the picture. Thursday’s Bank of England rate decision and press conference will be interesting given recent explicit statements surrounding the path of UK rates post-Brexit.
Looking to the day ahead: From the Eurozone, President Draghi will make opening remarks (18:00BST) at the start of an ECB Forum on Central Banking in Sintra, Portugal, which will continue into Wednesday. The market will keep a close eye on the rhetoric to see if there is any chance of a rate cut in the future.
Elsewhere this week:
Tues 18th: AUD Minutes of the Central Bank meeting on Int rates
Tues 18th: Germany the closely watched ZEW consumer sentiment survey is released, at the same time as Eurozone Inflation data
Weds 19th: UK Consumer Inflation
Weds 19th: NZD GDP data released
Thurs 20th: AUD Bank Gov. Lowe speaking
Thurs 20th: JPY rate decision and statement
Thurs 20th: UK rate decision & press conf.
Fri 21st: CAD Retail Sales
Fri 21st: Ger Inflation data