Trading Week Ahead: 7th – 11th June
Key Events & Data Releases This Week
MondayNZD Bank Holiday
ThursdayCAD BOC Rate Statement, Overnight Rate, BOC Press Conference – EUR Main Refinancing Rate, Monetary Policy Statement, ECB Press Conference – USD CPI, Core CPI
USD momentum saw a mid-week shift to the positive after the upbeat US data surprised. ADP Non-Farm Employment Change came in at 978K, well above expectations. ISM Services surprised increasing to 64.0, and unemployment claims fell to 385, the lowest numbers seen during the pandemic. These numbers support ongoing thoughts that the US economy is continuing to heat up. Government spending is another factor that has been seen driving inflation, and these number just add to the support that inflation remains a factor. Price is already increasing, and it has been reported that inflation has reached a 13 year high. This did wonders for the USD as it refound buyer interest and stages solid sessions to the risk majors, JPY, CHF and CAD.
The week ended with the NFP, data came in mixed with average earning beating expectations and unemployment decreasing, but job creation was a miss. The market was looking for 645K jobs but it only got 559k.
This maintained last weeks waves of momentum on the USD as it saw decent selling to end the week. The AUD, EUR, and GBP all surged post-NFP as the USD retreated.
President Biden continued in outgoing former President Trump’s mould, amending his order. 59 Chinese companies have now been blocked due to their military connections. This came after news earlier in the week that US trade officials had had positive conversations with their Chinese counterparts.
Australian GDP Beat Expectations
Locally the AUD couldn’t hold momentum despite higher commodity prices after US data set the US on a tear. The AUD saw sharp declines to the USD (after losing the short-term support it still had at the beginning of the week) and JPY. But the currency did fair a little better on some of the crosses. Australian GDP beat expectations, increasing to 1.8%. Higher commodity prices could be a driver for the increase. The ASX200 started last week, hitting consecutive records for the last three sessions of the week. The ASX200 closed at a record price of 7295.4 with a gain of 1.61% last week. The market shook off weak to lacklustre leads out of the US running firmly of its own drivers.
Gold was also hit hard mid last week after upbeat US data falling to 1855. This looking grim after what was a solid trend higher. Buyers flooded back to the metal in last Friday’s session and buying accelerated after the NFP data.
News From OPEC
Oil saw a second straight week of gains as buyers continued into new monthly highs. Price touched the $69 level, a level not seen in two years. OPEC meeting reaffirmed production cuts will continue gradually and hopes continue that demand will continue to grow from the US and Europe and restrictions continue to reduce, and vaccination rates continue. Views that this could continue to rebalance crude markets. Back in the U.S., restrictions have been lifted and a mass of the population getting vaccinated. People will look to be travelling after imposed breaks. This lines up nicely as the U.S. moves into driving season and masses take to the roads in the summer months. This could be a big driver in gasoline demand.
Iran remains a topic as the Nuclear talks are paused. Iran is not expected to come back online as a crude supplier before the talks are concluded. Even when their 2 million barrels due come back into the market, it thought rising demand should balance out the extra supply.
This week focus will be back on central banks as the ECB and BOC meet for rates decisions. The focus will be on the statements and for further clues and tapering plans as this has been brought up by both central banks. Canadian employment change was a shocker last Friday, so could tapering talk be on hold for now?
US CPI is another sensitive data release coming out this week. With all the current talk about inflation in the US and the surprise uptick in the last CPI data, could we be in for another surprise this week that get momentum back into the USD?