Weekly Outlook of Financial Markets for June 17-21

Leading commodities such as oil, gold and silver rallied during last week. Leading currencies including Euro, Japanese yen and Aussie dollar appreciated against the USD last week. Will commodities continue to trade up this week? This forthcoming week several reports, decisions and speeches may affect the financial markets. These include: FOMC meeting, BOC’s governor speech, U.S core CPI, Philly fed survey, EU current account, U.S housing starts, minutes of RBA’s meeting, Canada’s retail sales, China, EU and Germany’s manufacturing PMI, GB CPI, BOJ governor speech, U.S existing home sales, Euro Group meetings, G8 Summit and U.S. jobless claims.  Here is an economic outlook for the week of June 17th to June 21st regarding the U.S, Euro Area, Canada, Japan, China, Australia, and Great Britain.   

(All times GMT):

Update FOMC statement: Fed left policy unchanged but Bernanke stated the Fed may ease down QE3 by the end of the year.

Monday, June 17th

13:30 – Canada’s Foreign Securities Purchases: This report presents the changes in Canada’s value of domestic securities and money-market assets purchased by non-residents during April. It may affect the USD/CAD currencies pair, which is strongly linked with commodities prices. In the previous report regarding March 2013, non-residents purchased $1.2 billion of Canadian securities;

All Day (two days) – G8 Summit: this two day Summit will be held in Ireland; if the G8 countries will come up with big headlines from this Summit it may affect financial markets. This G8 Meeting could revolve the policies of U.S, UK and Japan.

00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The minutes of the latest monetary policy meeting of the Reserve Bank of Australia may offer some insight behind the decision of board to maintain the rate unchanged at 2.75%; the minutes of this meeting may affect the Australian dollar and consequently commodities prices such as oil and gold;

Tuesday, June 18th

09:30 – GB CPI (May 2013): This report may affect the British Pound currency. In the previous report regarding April 2013, the CPI sharply declined to an annual rate of 2.4%;

10:00 – German ZEW economic sentiment: The forthcoming report will pertain to the ZEW indicator of economic sentiment for Germany for May. In April the ZEW indicator for Germany edged up to 36.4 points; if Germany’s economic sentiment will rally, the Euro will plausibly strengthen against other currencies such as the USD;

10:00 – Inflation Report Hearings: Bank of England Governor and other PMC members will testify before Parliament’s Treasury Committee. They will refer to the economic progress of the UK and developments in the currencies markets;

Tentative – Bank of England Inflation Report: this report will present the yearly rate of GB’s inflation based on the estimate of Bank of England for the next two years;

13:30 – U.S. Housing Starts: the U.S Census Bureau will publish its U.S housing starts monthly report for May 2013; this report was historically linked with gold price – as housing starts fell, gold prices tended to rise the next day (even when controlling to the U.S dollar effect); in the previous monthly report, the adjusted annual rate reached 853,000 in April 2013, which was 16.5% below March’s rate;

13:30 – U.S. Building Permits: in the previous update, building permits spiked during April by 14.3% (M-o-M) in the adjusted annual rate of building permits was 1,017,000. If building permits will continue to rise, it may indicate that the U.S housing market (from this aspect) is slowly recovering (the recent U.S building permits update);

13:30 – U.S Core Consumer Price Index: This monthly update will refer to the main developments in the core consumer price index for May 2013. According to the U.S Bureau of Labor statistics, during April, the CPI declined by 0.4% (M-o-M); the core CPI inched up by 0.1%; the core index rose over the past twelve months by 1.7%.

23:50 – Japanese Trade balance: In April 2013 the Japanese trade balance deficit fell by 16.9% compared to March, and reach 764 billion yen (roughly $7.79 billion) deficit (seasonally adjusted figures). This is drop in deficit was due to the drop in imports (by 2.4%) and the fact that exports remained flat.  Japan is among the leading importers countries of commodities, including oil and gold; its trade balance could offer some insight regarding Japan’s progress in demand goods and services;

Wednesday, June 19th

09:30 – Minutes of MPC Meeting: in the latest MPC meeting, the Bank left the rate unchanged at 0.5% and the asset purchase program at £375 billion; the MPC still shows concerns regarding the progress of the UK economy. The minutes of last week’s meeting might offer some perspective regarding the bank’s future monetary policy;

Tentative – German 10 Year Bond Auction: the German government will have its monthly bond auction; in the last bond auction, which was held at the middle of May, the average rate reached 1.28% – its lowest level this year (UTD);

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will come out with its weekly report on the U.S oil and petroleum stockpiles for the week ending on June 14th; in the recent report for June 7th, stockpiles sharply increased by 12.8 ml bl to reach 1,823.9 ml bl.

17:40 – Governor Poloz speaks: Bank of Canada’s  new Governor will hold a press conference about the Bank’s inflation report; he may also offer talk about the upcoming MPC monetary policy meeting; this speech may affect British Pound traders;

19:00 – FOMC Meeting, Economic Forecast and Press Conference:  The FOMC will convene for the fourth time this year and announce at the end of two day of session of any changes to its monetary policy. In the previous of meeting the FOMC left its policy unchanged. Moreover, Bernanke’s testimony didn’t offer any big headlines, even though he did suggest that tapering the current asset purchase program isn’t off the table and could happen in the near future. Considering the inflation is still very low, the unemployment is still well above the Fed’s goal of 6.5% and economic growth isn’t stable, I suspect the Fed won’t change its policy this time. Over the weekend the IMF criticized the U.S for expanding its budget to promote growth. This is another consideration that might keep the Fed’s current QE3 policy unchanged. The Fed’s forecast, however, could change, which, in turn, could influence traders and investors. If The Fed will implement any changes to its policy or change its forecast, these changes could stir up the markets;

02:45 – China flash Manufacturing PMI: this index is based on a survey that covers 800 companies in 20 industries in China; in the previous HSBC Manufacturing PMI survey regarding May 2013 the Manufacturing PMI slipped to 49.6; this index indicates China’s manufacturing sectors have contracted; if the index will continue to fall, this may adversely affect commodities;

Thursday, June 20th

08:30 – Libor Rate of Swiss National Bank: the Swiss National Bank will publish its updated Libor rate; this decision could affect not only currencies markets but also commodities markets the bank will change the Libor rate;

09:00 – Flash German, French and Euro Zone Manufacturing PMI: In the previous monthly report regarding May 2013, the German PMI rose to 49 i.e. the manufacturing conditions are shrinking at a slower pace. This report serves as an indicator to the economic developments of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities;

09:30 – GB Retails Sales (May 2013): This report will present the changes in the retails sales in Great Britain for May 2013. It may affect the path of the British Pound currency. In the previous report regarding April 2013, retails sales declined by 1.3%;

13:30 – U.S. Jobless Claims Weekly Report:  this weekly report will refer to the changes in the initial jobless claims for the week ending on June 15th; in the previous report the jobless claims declined by 12k to reach 334k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;

All Day – Euro-Group Summits: In this summit, the EU ministers of finance and Euro-Group President will convene in Brussels. They are expected to talk about the recent economic and monetary developments in Europe;

15:00 – U.S. Existing Home Sales: This report will refer to the shifts in U.S. existing home sales for May 2013; in the previous report regarding April 2013 the number of homes sold slightly rose to a seasonally adjusted annual rate of 4.97 million houses; if this trend will persist, it might pressure up the U.S dollar;

15:00 – Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the previous survey regarding May, the growth rate slipped from 1.3 in April to -5.2 in May. If the index will increase it may positively affect not only U.S Dollar but also American equity markets and commodities (the previous Philly Fed review);

15:30 – EIA U.S. Natural Gas Storage: the EIA weekly report of the U.S. natural gas market will refer to the latest changes in natural gas production, storage, consumption and prices as of June 14th; in latest weekly report, natural gas storage rose by 95 Bcf to 2,347 Bcf;

Friday, June 21st

07:35 – Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will talk at National Association of Shinkin Banks, in Tokyo. Considering the high volatility of Japan’s currency and the drop in the equity markets, his words could influence traders;

09:00 – EU Current Account: This report will refer to changes in the difference between imports and exports. Last month, the EU’s current account surplus sharply rose to €25.9 billion;

09:30 – Great Britain Net borrowing: this report will pertain to the monthly shifts in the public sector net borrowing for May 2013; as of April 2013, the net borrowing reached £8.0 billion;

All Day – ECOFIN Meetings: In this summit, the EU ministers of finance will talk about the latest developments in Europe;

13:00 – Canada’s core CPI: This report will pertain to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for May 2013. Based on the recent Canadian CPI report for April, the core CPI inched up by 0.1%. This report might affect the Canadian dollar, which is also strongly linked with gold and silver prices;

13:30 – Canada Retails Sales (April 2013): This report will refer to the retails sales in Canada as of April. In the recent report regarding March 2013, retails sales slipped by 0.2%.

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