Forex Weekly Outlook – June 19-23 2017

The US dollar advanced nicely thanks to the Fed’s hawkish hike. Can it continue advancing? The Fed can continue influencing currencies thanks to speeches from top Fed officials. In addition, we have housing data from the US and other events. Here are the highlights for the upcoming week.

The Fed raised interest rates despite weak inflation data[1]. Moreover, Yellen dismissed the current slump in inflation as related to one-off factors[2]. In addition, they left the dot=plot unchanged, implying another hike later this year and expressed confidence in growth. The dollar managed to overcome the revelation that Trump is being investigated for an alleged obstruction of justice[3]. Elsewhere, the pound stabilized thanks to three votes for a rate hike[4], Australia enjoyed an excellent jobs report and the Canadian dollar jumped on a hawkish shift from the BOC[5].

Updates:

  1. FOMC’s Dudley talks: Monday, 12:00. New York Fed President Bill Dudley is No. 3 at the Federal Reserve and usually a dove. In his speech in Plattsburgh, Dudley could provide more insight about the next moves of the Fed. Markets care mostly about interest rates and if Dudley surprises with hawkishness, markets will react.
  2. FOMC’s Fischer talks: Tuesday, 12:00. Stanley Fischer is the Vice Chair of the Fed and contrary to Dudley, he is considered a hawk. Fischer will be speaking across the pond, in Amsterdam. Fischer will have a bigger impact if he goes dovish.
  3. US Existing Home Sales: Wednesday, 14:00. Most home sales are of existing, second-hand homes. Back in April, the annualized level of sales stood at 5.57 million. A similar level is on the cards now.
  4. Crude oil inventories: Wednesday, 14:30. The weekly update on the level of inventories always moves oil prices but also has a wider impact. The recent rises in inventories pushed oil prices lower and this goes hand in hand with the stronger dollar. The correlation is strengthening. Inventories dropped by 1.7 million last week.
  5. New Zealand rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand maintained the interest rate at 1.75% in the past few meetings, since lowering it in November 2016. In general, the New Zealand economy is doing well and this is reflected in the recent rise of the kiwi. However, the most recent GDP report fell short of expectations, with a gain of only 0.5% q/q. The team led by Governor Graeme Wheeler is likely to leave the interest rate unchanged at 1.75% and the statement will make a difference. They usually try to talk the currency down.
  6. US jobless claims: Thursday, 12:30. This weekly barometer of the US jobs markets looks very stable and going in the right direction. A drop to 237K was seen recently. A similar number is on the cards. Contrary to previous releases, this time the publication stands on its own.
  7. US new home sales: Friday, 14:00. While most sales are of existing homes, the sales of new homes triggers wider economic activity around them. New home sales stood at 569K in April and a small rise is likely now.

*All times are GMT

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from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/C6LU8cE2cLo/

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