Calendar Week 24-2023

 

Massive week of news coming up, so volatility will be extreme.

 

Tuesday night we get the US inflation data, whilst the Fed will be starting their meeting much around the same time, a really poor print could swing the decision late in the game.

 

This is followed up on Wednesday with PPI, a less important figure but still an indication of how the US economy is tracking. Also Wednesday is the British GDP numbers.

 

Then comes Super Thursday.

 

First out of the gate is FOMC. Market has priced in just a 25% chance of a move in rates by the US Fed at this meeting and 80% chance of another hike in July’s meeting. Market seems to be listening to one narrative of the Fed “pause”. Market could get wild around Powell’s presser half an hour later, with every word dissected by the market movers.

 

2nd up is Kiwi GDP followed by Australian unemployment. Will we see any impact of rate hikes on jobs yet? With the rate at 3.7% and no major uptick in job losses we are far from hitting a recession and would be a clear signal to the RBA that they have more room to move if required.

 

4th through the gate is Chinese data, will we get extra confirmation that their economy is struggling. With the real estate “stimulus” package still to be announced officially let alone released, strong results here may delay that package. Then we get “good data” becomes bad and the market sells off, including commodities and commodity currencies. If weak numbers, then that bolsters the case for the stimulus to be released and even increased. So bad becomes good.

 

After that hectic six hours, you get a breather until the ECB meet to discuss rates, and over a half hour period you will see the ECB (most likely) raise rates, then the US retail sales numbers followed by ECB’s Lagarde presser. So be careful in the Euro around this time.

 

The Friday we finish the week with the BOJ policy announcement, which is unlikely to be changed from last months.

 

That should be enough to either get you into trouble or have fun with. As always, trade accordingly!

 

Currency Guidance

 

USD – As we wrote last week, upside for USD did not materialise. This week will be fully data dependant. I think the Fed will not move either way. Just remember that the US dollar will track interest rates (no move) and or safe haven flows. So risk off (stocks off) sees the USD up, risk on (stocks up) sees USD down.

 

AUD – Too far too fast, the commodity picture has not moved as far as the AUD has, so it has got ahead of itself here. Major data for it with jobs and Chinese prints, not to mention the Greenback too, I expect it to rotate back to test 0.66 all things being equal.

 

EUR – Minor resistance at 1.08 and the Euro couldn’t tag it before fading. Looking for this to fade back into the low 1.05’s of the March lows.

 

GBP – I am surprised by the strength in the Cable. Nothing in their macro data points to any inner economic strength recently. In fact the opposite. Inflation at a crazy 8.7% which is off from earlier highs but still nasty. So I am not sure how much to believe in this trend. But, technically it looks to be heading higher to retest may highs of 1.268.

 

JPY – Not much to say here. Nothing has changed since last week, nothing will change this week. The USDJPY will be dominated by what happens Stateside.