Trading on key Forex news: we are waiting for the outcome of the meetings of the New Zealand's RB , the European Council, as well as the publication of inflation indicators for the Eurozone and the United States.

The past week saw the escalation of trade contradictions between the US and China, as well as between the US and the EU.

President of the United States Donald Trump announced his readiness to introduce a new 10% duty on imported Chinese goods for $200 billion. In response, China has introduced mirroring measures and established 25% duties on American goods for a similar amount. The tariffs will also come into force on July 6th.

"The uncertainty surrounding the prospects for economic growth in the eurozone has recently intensified," ECB President Mario Draghi said on Tuesday morning.

Last Wednesday, the European Commission decided to introduce a 25% duty on the import of a number of US goods to the EU countries with a total amount of 2.8 billion euros.

President Donald Trump might decide to exacerbate the trade conflict with the EU, considering the possibility of imposing duties on European cars. These duties could harm the EU's exports in the amount of 0.3% of the region's GDP, according to economists.

At a meeting in Portuguese Sintra organized by the ECB, heads of the Federal Reserve System, the European Central Bank, the Bank of Japan, and the Reserve Bank of Australia called for a peaceful resolution of trade problems and warned that the price of further escalation of this conflict would be high.

Volatility on the foreign exchange market also increased on Thursday, when the meeting of the Bank of England dedicated to monetary policy was held. The fact that the number of supporters from among the members of the Monetary Policy Committee advocating an immediate increase in the rate rose (to 3 out of 9) was a surprise.

As a result, the pound grew sharply, including against the dollar.

On Friday, OPEC countries agreed on an increase in aggregate oil production of about 600,000 barrels per day. This lower-than-expected increase in production weakened fears of an early increase in supply and convinced investors that the OPEC + agreement will continue to support the oil market. This cartel solution was the trigger for the prices that rushed up. Brent oil went up by $2.4 (or 3.3%) to $75.60, largely in the wake of losses of the previous week.

The next week will be the last in this month, which has been so abundant in important economic events.

The focus of traders' attention this week will be on meetings of the RB of New Zealand and the European Council, as well as the publication of inflation indicators for the Eurozone and the United States.

 

As always, a number of most important macroeconomic data and several important newsare expected to be published this trading week

 

Monday, June 25

 

Macro data of medium importance is published:

08:00 (GMT + 3) in Japan (will have a short-term impact on JPY)

11:00 in Germany (will have a short-term impact on EUR)

15:30, 17:00 in the US (will have a short-term impact on USD)

 

 

Tuesday, June 26

 

Macro data of medium importance is published:

16:00 in the US (will have a short-term impact on USD)

 

Wednesday, June 27

 

Macro data of medium importance is published:

01:45 in New Zealand (will have a short-term impact on NZD)

11:00 in Switzerland (will have a short-term impact on CHF)

11:00 in Eurozone (will have a short-term impact on EUR)

15:30, 17:00 in the US (will have a short-term impact on USD)

 

11:30 GBP (Bank of England (BoE) Financial Stability Report)

Twice a year, the Bank of England, with the assistance of the Interim Financial Policy Committee, presents a report on financial stability with an assessment of the prospects for stability and sustainability of the financial sector at the time.

The Governor of the Bank of England and the members of the Bank of England's Monetary Policy Committee speak in Parliament with comments on the current financial and economic situation. At this time, volatility in pound trades could rise sharply. If the tone of the report is soft, the British stock market will receive support, and the pound will decrease. Conversely, tough rhetoric of representatives of the Bank of England regarding the prospects for the financial sector is a positive, or bullish, factor for the GBP.

 

11:30 GBP Speech by Head of the Bank of England Mark Carney

Participants of the financial markets expect him to clarify the situation regarding the future policy of the central bank of England. Volatility during his speech usually grows abruptly in pound trade and in the London Stock Exchange index FTSE in case Mark Carney gives any hints at the tightening or softening of the monetary policy.

If he does not touch upon the questions of the monetary policy of the Bank of England, the reaction to his speech will be weak.

 

22:00 CAD Speech of the head of the Bank of Canada Stephen Poloz

In his speech, head of the Bank of Canada Stephen Poloz will explain the bank's position and assess the current economic situation in the country. If the tone of Stephen Poloz's speech is tough with respect to the monetary policy of the Bank of Canada, the Canadian dollar will strengthen on the foreign exchange market. If Stephen Poloz expresses his support for maintaining soft monetary policy, the Canadian currency will decline. In any case, during the speech of Stephen Poloz, high volatility is expected in the Canadian dollar.

Investors also want to hear Poloz's opinion about the prospects of the NAFTA. New US import duties on Canadian steel and aluminum, as well as Canada's counter import duties on American goods have a strong negative impact on the trade relations between the two countries. Earlier, US President Trump also threatened to withdraw from the NAFTA.

Thursday, June 28

 

Macro data of medium importance is published:

02:50 in Japan (will have a short-term impact on JPY)

12:00 in Eurozone (will have a short-term impact on EUR)

 

00:00 NZD The decision  of the RB of New Zealand on the interest rate. The accompanying statement of the RBNZ

The RB of New Zealand is deciding on the interest rate. The current interest rate in New Zealand is at 1.75%, remaining one of the highest in the world among advanced economies. And this attracts investors into almost safe purchases of the New Zealand currency that generates revenue, as well as traders using "carry-trade" strategies, when a more expensive currency is bought at the expense of the cheaper one. It is widely expected that at this meeting the interest rate will remain at the same level of 1.75%.

In the accompanying statement, the RBNZ will explain the decision on the interest rate and comment on the economic conditions that contributed to the adoption of this decision.

At this time, volatility in the New Zealand dollar increases.

 

09:00 EUR The Harmonised Index of Consumer Prices (HICP) in Germany (estimate for June)

This index is published by the EU Statistics Office and is calculated on the basis of the statistical methodology agreed upon by all EU countries. The index is an indicator for estimating inflation and is used by the ECB Governing Council to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it. In the previous month, the HICP index (in annual terms) increased by 2.2%.

15:30 USD Annual GDP of the United States, core personal consumption expenditure(PCE) (adjusted values)

Data on GDP is one of the key indices (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. A strong result strengthens the US dollar; a weak GDP report has a negative effect on the US dollar. In the previous quarter, GDP growth was +2.5%. The forecast for the 1st quarter of this year is +2.2% (+ 2.2% as per the preliminary release). If the data proves to be worse than the forecast, the dollar will react with a decrease.

The core personal consumption expenditure index is an important indicator of inflation reflecting the average amount of money that Americans spend per month on durable goods, consumer goods and services (excluding food and energy). This indicator is one of the most important indicators that the Fed takes into account when deciding on the rate.

The high indicator is considered as a positive factor for USD, the data below the forecast adversely affect the rate of the USD. Forecast: for the 1st quarter the value of the index was 2.7% (against the previous value of 2.3%). If the forecast is confirmed or if the data is stronger, the dollar will be strengthened.

 

Friday, June 29

 

Macro data of medium importance is published:

02:01 in the UK (will have a short-term impact on GBP)

04:30 in Australia (will have a short-term impact on AUD)

09:00, 09:45, 11:00 in Eurozone (will have a short-term impact on EUR)

10:00 in Switzerland (will have a short-term impact on CHF)

11:30 in the UK (will have a short-term impact on GBP)

15:30, 17:30 in Canada (will have a short-term impact on CAD)

16:45, 17:00 in the US (will have a short-term impact on USD)

 

02:30 JPY Consumer Price Index (CPI) in Tokyo region

This consumer price index published by the Bureau of Statistics of Japan reflects the evaluation of price dynamics obtained as a result of comparison of retail prices of the corresponding basket of goods and services. CPI of Tokyo, an important barometer of changes in consumer trends, in May pointed to a 0.4% rise in prices (in annual terms). The CPI of Tokyo index excluding the price of fresh food in May was at 0.5% (in annual terms). Inflation in Japan is still low. The growth of the indice may provoke the strengthening of the yen. During the publication of the CPI indices, the volatility of trade in the yen and the Japanese stock market is expected to increase.

 

12:00 EUR Consumer Price Index (CPI). Core CPI (preliminary release).

This indicator is published by the Eurostat and determines the change in the prices of the selected basket of goods and services for a given period. It is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the EUR, a negative result weakens it.

Forecast: in June, CPI (in annual terms) increased by 2.0% (against + 1.9% in the previous month), which should positively affect the euro.

Forecast: in June, the core CPI increased (in annual terms) by 1.0% (against + 1.1% in the previous month). This is a more negative than a positive factor for the euro.

 

15:30 USD Core PCE price index

The data is published by the Bureau of Economic Analysis of the US Department of Commerce and reflects the average amount of money Americans spend per month on durable goods, consumer goods and services (excluding food and energy). One of the most important indicators of inflation, which is taken into account by the Federal Reserve when deciding on the interest rate. A strong result strengthens the US dollar. The indicator below the forecast weakens the dollar. Forecast: in May, personal spending of Americans increased by 1.8% (in annual terms) against + 1.8% in April. The results better than forecast will strengthen the USD.


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Price chart of EURUSD in real time mode

Economic calendar for the week 25.06 - 01.07.2018

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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