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Forex Major Currencies Outlook (June 22 – June 26)

This week we will have RBNZ meeting, PCE and personal spending data from US as well as preliminary June PMI data from EU, GBP and Japan.


Retail sales in May rebounded more than double than expected coming in at 17.7% m/m vs 8.6% m/m as expected. In addition to the strong headline reading previous month’s number was revised higher giving more strength to the report. Clothing stores along with furniture stores were the biggest contributors. This should ease the negative impact of lockdown on Q2 GDP, however the reading is down -6.1% compared to May 2019. Initial jobless claims for the week ending June 13 came in at 1508k vs 1290k as expected. This is the 13th week of claims above 1 million. Continuing claims are hovering around 20.5 million.

The Secondary Market Corporate Credit Facility (SMCCF), worth $750bn, was announced in March. With this program Fed will buy debt in markets, even directly from companies, rather than via ETFs as was done previously. The new program will involve purchases of corporate bonds issued by investment-grade US. Companies as well as corporate bonds issued by companies that were investment-grade rated as of March 22, 2020.

This week we will have housing data, final Q1 GDP reading, durable goods data as well as PCE inflation and personal spending data.

Important news for USD:


  • Existing Home Sales


  • New Home Sales


  • GDP
  • Durable Goods Orders


  • PCE
  • Personal Spending


German ZEW survey of the current situation came in at -83.1 vs -93.5 the previous month for a small move in the right direction. Expectations category for both Germany and EU came in stronger than previous month (64.4 and 58.6 respectively) indicating optimism regarding possible economic recovery in second part of the year. Final May inflation data showed headline number at 0.1% y/y and core number at 0.9% y/y, both same as preliminary reported.

This week we will have preliminary June PMI readings.

Important news for EUR:


  • Markit Manufacturing PMI (EU, Germany, France)
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)


Jobless claims for May came in at 528.9k with claimant count rate jumping to 7.8% from 5.8% the previous month. In period from March to May they surged astonishing 125.9%. The ILO unemployment rate, which is measured as the number of unemployed workers divided by the total civilian labour force, stayed the same in April at 3.9%. Around 9,1 million people were furloughed. A huge drop was seen in wages with average weekly earnings dropping to 1% 3m/y from 2.3% 3m/y the previous month. Slower wage growth indicates lower consumption which in turn will put downward pressure on inflation. Inflation in May came in at 0.5% y/y as expected with core sliding to 1.2% y/y vs 1.3% y/y as expected. Retail sales came in at 12% m/m vs 6.3% m/m as expected and up from -18% m/m the previous month. Core retail sales (ex autos, fuel) also bounced back more than exepected coming in at 10.2% m/m from -15% m/m the previous month. Although the monthly figures show a great rebound, yearly figures show that consumption is still very much subdued compared to the previous year.

BOE has left the rate unchanged at 0.10% and they have expanded their asset purchase program by £100bn. MPC have voted 8-1 in favour to increase QE program target with BOE chief economist Andy Haldane the only one to dissent. MPC members expect total stock of asset purchases to be hit around the turn of the year. They have stated their readiness to increase the amount of purchases if necessary. There was no mention of negative rates or yield curve control.

Prime Minister Johnson had an hour-long videoconference call with European Commission President Ursula von der Leyen and other EU officials with both sides agreeing to work toward a deal. According to the document from German government they expect negotiations to intensify only after September.

This week we will have preliminary June PMI readings.

Important news for GBP:


  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


Employment change in May came in at -227.7k vs -78.8k as expected, almost a threefold miss. The unemployment rate jumped to 7.1% from 6.4% the previous month while participation rate fell to 62.9% from 63.5% the previous month. Full-time employment change was -89.1 k while part-time employment change came in at -138.6k. This is a very weak report compounded with negative revisions to the previous numbers as well as the fact that drop in the participation rate smoothed the jump in the unemployment rate and still it jumped almost full percentage point. Preliminary retail sales report showed a bounce to 16.3% m/m from – 17.7% m/m the previous month. Prime Minister Morrison announced a new spending program of AUD1.5bn, 2/3 of which will be spent on infrastructure. Additionally, Australia will raise minimum wage by 1.75% to stimulate aggregate demand and ease negative effects of the virus on the labour market.       

Industrial production in May in China came in at 4.4% y/y vs 5% y/y as expected but up from 3.9% y/y the previous month. Retail sales came in at -2.8% y/y vs -2.3% y/y as expected for a fourth consecutive month of decline in consumption. Previous month’s reading was at -7.5% y/y so both consumption and industrial production are improving albeit at slower than expected rate.


RBNZ Governor Orr stated in an interview his satisfaction with impact of QE, pointing to flatter yield curve. Next steps could include increase in QE, increase in number of instruments included in QE as well as negative interest rates indicating that RBNZ still has many tools to support the economy. Q1 GDP came in at -1.6% q/q vs -1% q/q as expected. Since Q2 GDP will be negative. due to the effects of the lockdown, this signals a recession in New Zealand (two consecutive quarters of negative GDP growth). GDT price index came in at 1.9% for the third consecutive auction of rising dairy prices. 

This week we will have RBNZ rate decision, no change is expected, they should stand the pat and let the already taken measures produce results as well as trade balance data.

Important news for NZD:


  • RBNZ Interest Rate Decision
  • RBNZ Rate Statement


  • Trade Balance


Headline inflation for May came in at -0.4% y/y vs 0% y/y as expected. Food and shelter category contributed positively to the reading but reading was overturned by drops in clothing, transportation and recreation, education and reading categories. Core measures came as expected: median at 1.9% y/y, common at 1.4% y/y and trimmed at 1.7% y/y, all of them weaker than the previous month. Retail sales in April were horrific, coming in at -26.4% m/m vs 15.1% m/m as expected with the ex-auto category coming in at -22% vs -12% as expected. April was the worst month with full lockdown throughout. Early retail sales estimates for May from Statistics Canada see them rebounding by 19.1% m/m.


BOJ kept the short-term interest rate at -0.10% as widely expected. The state of Japan’s economy has been characterized as severe with exports, outputs and consumption falling sharply while the pace of increase in capex is clearly slowing. They will increase their pandemic combat program to around JPY110 trillion from JPY75 trillion previously. Governor Kuroda reiterated that BOJ sees the situation in the economy as extremely severe, added that they will take additional steps if needed and sees a recovery in second part of the year. Additionally, he added that the BOJ will not be able to raise interest rates before Fed hikes its rate. Since Powell stated last week that they are “not even thinking about thinking about raising rates” we will see a prolonged period of negative interest rates from Japan.

Trade balance for May came in at -JPY833.4bn vs -JPY1030bn as expected. Exports have plunged -28.3% y/y for the 18th consecutive month drop while imports fell -26.8% y/y for the 13th consecutive month drop. Exports to US have fallen amazing -50.6% y/y while exports to EU dropped -33.8% y/y. Exports to China, Japan’s biggest trade partner, were down -1.9% y/y. National inflation in May came in at 0.1% y/y, same as the previous month, vs 0.2% y/y as expected. Ex-fresh food category remained in the negative at -0.2% y/y while ex-fresh food, energy measure came in at 0.4% y/y vs 0.2% y/y the previous month. The battle with deflation intensifies and so far it looks that BOJ is on the loosing side.

This week we will have preliminary June PMI readings as well as inflation data from Tokyo area.

Important news for JPY:


  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • Tokyo CPI


Total sight deposits for the week ending June 12 came in at CHF679.5bn vs CHF680.1bn the previous week. Second week in a row of declining deposits as SNB eases their action in the markets ahead of the meeting. SNB left the policy rate unchanged at -0.75% as widely expected. They have lowered inflation expectations to -0.7% for 2020 and see inflation going back to positive only in 2022 (0.2%). Estimations are for -6% GDP contraction in 2020. SNB chief Jordan stated that Swissy is still highly valued and confirmed that they made substantial currency interventions since March. We have written about it and followed it through the rise in total sight deposits.

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+3 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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