Trading Week Ahead: 15th June – 19th June 2020
Key Events and Data Releases This Week
JPY Monetary Policy Statement
USD Retail Sales, Core Retail Sales
Fed Chair Powell Testifies
USD Fed Chair Powell Testifies
AUD Employment Change, Unemployment Rate
CHF SNB Monetary Policy Assessment, SNB Press Conference
GBP Asset Purchase Facility, MP Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate
CAD Retails Sales, Core Retail Sales
USD Fed Chair Powell Speaks
(Times adapted to AEST timezone)
A Tale of Two Announcements
Last week we saw a real mix of fortunes as markets started the week on a real positive note. The previous Friday’s shock U.S. Non-Farm Payrolls reading for May drove buying, with an increase of 2.5 million payrolls boosting calls that the recovery was on, and a better than expected Chinese trade balance also added to those hopes. Looking back at the buying part, it was quite surreal seeing the Nasdaq build on its new records, climbing over 2% to its weekly high. The AUD moved above .7060, while EURUSD tested 1.1423.
Positivity looked hard set until midweek when the Federal Reserve met and gave a more pessimist view of the U.S. economy. This had an immediate impact on the markets, sinking risk markets and boosting USD higher. Risk currencies had already been moving lower to the JPY but they soon followed suit to USD after the announcement. Stocks retreated from their weekly highs with the Dow dropping over 6% on Thursday, recording its worst session since March. Elsewhere, Gold saw renewed demand retesting the 1744 level, while oil’s recovery also hit a stall, with sellers cutting over 14% off its value at the week’s low.
This week we will be watching how risk markets react to last week’s weakness as new trends seemed to be developing on several risk currencies. The GBP will be a focus as the Bank of England meets on Thursday, with speculation continuing around a move back to negative rates. Last week’s GDP continued the run of shocking data out of the UK, with the reading coming in at -20.4%, well below the 18.6% expected. Australian employment data is also on the agenda during the week. Will we see something positive following the government’s JobKeeper program? The current rate sits at 6.2%, which was a lot better than what had been expected and the question now is whether May’s data will build on that momentum and come in better than anticipated.
We are expecting the second part of the Fed testimony on Thursday. This includes the Q&A session which could lead to volatility depending on the questions asked. With regard U.S. retail sales, will we see an improvement on the last -16.4% figure as more U.S. states have come back online since the COVID-19 lockdown?
We end this week with another Nasdaq chart. Once again it moved well clear after the Non-Farm Payrolls announcement, hitting the 10K level for the first time in its history.