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Forex Major Currencies Outlook (June 21 – June 25)

BOE meeting coupled with preliminary June PMI data from Europe and PCE inflation data from the US will be the most interesting events in the week ahead of us.


Retail sales in May missed expectations by coming in at -1.3% m/m vs -0.7% m/m as expected. On the positive side there was a big upward revision to April’s reading, up to 0.9% m/m from being flat as initially reported. Control group came in at -0.7% m/m vs -0.4% m/m as expected, however prior month’s reading was revised up all the way to -0.4% m/m vs -1.5% m/m as reported. Building materials and electronics reported big declines while clothing and personal care were positive. Consumers are dialling down on purchases of goods. Potentially they are switching their spending to services now that restrictions are loosened. 

Fed has left its rate and monetary policy unchanged at their June meeting. QE will go on at the current pace of $120bn per month and stance on rates has been reiterated, they will remain at the current level "until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time." FOMC dot plot has shown a more hawkish picture with 7 Fed officials seeing rates higher in 2022, up from 4 at March meeting and 13 of them seeing rates higher in 2023, up from 7 at March meeting. They are now predicting 2 rate hikes in 2023. Central tendencies for 2021 show GDP at 6.8% to 7.3% vs. 5.8% to 6.6% in March. The unemployment rate has been adjusted higher at 4.4% to 4.8% vs 4.2% to 4.7% in March. Inflation (PCE) is now seen much higher at 3.1% to 3.5% vs 2.2% to 2.4% in March with Core PCE at 2.9% vs 3.1% vs 2.0% to 2.3% in March. 

Fed Chairman Powell stated that indicators of activity and employment continue to improve. He says that US is on a path for a very strong labor market in 1-2 years’ time. Current employment levels have been impacted by unemployment benefits (set to expire in September) and child care needs (will be eased once childcare centers reopen). Household spending and business investment are rising at a solid pace. Inflation has been “notably” higher and there is a possibility it could be persistent. Chairman added that "Inflation expectations have continued to move up". There was a clear move from characterizing inflation as “transitory”. Powell seems to move his approach from data-based to more forward looking. USD gained over 100 pips against EUR and GBP on the news and pushed them below 1.20 and 1.40 levels respectively. Gold was also hammered toward the $1800 and it dropped below that level later in the week. 

This week we will have PCE inflation and personal spending data. With Fed upgrading their projections for inflation we can expect PCE reading to come above 4%. 

Important news for USD: 


  • PCE
  • Personal Spending 


Industrial production in April came in at 0.8% m/m vs 0.4% m/m as expected and 39.3% y/y vs 37.4% y/y as expected. Additionally, readings for previous month have been upwardly revised, thus adding more to the already strong April reading. Durable goods were up 3.4% while capital goods were up 1.4%. Yearly reading is particularly high due to base effects. Disruptions within supply chains as well as increasing price pressures are posing concerns for the future of industrial production. Overall, another input positively contributing to the expected rebound in Q2 GDP. Final inflation numbers for May saw CPI unchanged from preliminary reading at 2% while core ticked slightly higher to 1% from 0.9% as preliminary reported. With core reading so muted there will no pressure on ECB to change its course. ECB officials have already reiterated that it would be premature to end the PEPP program. 

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)


Employment data showed claims drop -92.6k in May vs -15.1k in April. Claimant count rate dropped to 6.2% from 7.2% the previous month. ILO unemployment data for April ticked down to 4.7% from 4.8% while three-month employment change rose 113k (expectations were for a 135k rise). Wages were also higher with both regular and ex-bonus weekly readings coming in at 5.6% 3m/y. A strong report showing the labor market moving in the right direction. An additional positive is that sectors that were suffering most through the pandemic, hospitality, are showing signs of job recovery.

Inflation is starting to pick up in May. Headline number came in at 2.1% y/y vs 1.8% y/y as expected with core reading coming in at 2% y/y vs 1.5% y/y as expected. The reading is influenced by base effects as well as higher input prices. Rising prices for clothing, recreational goods, fuel as well as for meals and drinks also contributed to higher inflation. Retail sales missed expectations, but are still well above pre-pandemic. Headline number came in at -1.4% m/m vs 1.5% m/m as expected while ex autos, fuel category came in at -2.1% m/m vs 1.4% m/m as expected. Food stores were the main drag on the reading. The reading was also influenced by the incoming shift from goods in physical stores toward services.

Prime Minister Johnson stated that the government’s concern regarding new Delta variant of the virus and decided to delay end of lockdown for four weeks, until July 19. He expressed his confidence that lockdown will not be prolonged after July 19 with possibility that if virus developments move in positive direction it could lead to earlier end. News reports see that earlier end on July 5.

This week we will have preliminary June PMI readings as well as BOE meeting. No changes in rate and policy are expected at this meeting. Inflation did rise above 2%, but the bank should tolerate it until it goes into 3-3.5% range.

Important news for GBP:


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


  • BOE Interest Rate Decision


Australia printed a massive employment report. Employment change came in at 115.2k vs 30k as expected. The unemployment rate plunged to 5.1% from 5.5% the previous month, expectations were for it to remain at 5.5%. Additionally, the drop in the unemployment rate was achieved on the back of rising participation rate which came in at 66.2% vs 66% in April. Finally, as the icing on the cake, 97.5k were full-time jobs. Employment has now moved above pre-pandemic levels (860k jobs lost and around one million gained). Should this translate to higher wage growth it will create inflationary pressures and propel RBA to act sooner than they expected. RBA targets the unemployment rate at 4.5% and wage growth in the range of 3-3.5%. The underemployment rate has fallen to 7.4% indicating that workers are finding jobs they want, which potentially could lead to the shortage in qualified workers and in turn lead to rising wages as employers will have to pay more to entice workers.

Data from China again missed expectations. Retail sales came in at 12.4% y/y vs 14% y/y as expected while industrial production came in at 8.8% y/y vs 9.2% y/y as expected. Car sales were the biggest drag on the retail sales and main cause for the miss. Misses are concerning but numbers are rather high indicating that China is well on its recovery path. Global supply chain disruptions and increasing commodity prices are presenting big problems for the economy.


Q1 GDP showed strength of New Zealand economy by coming in at 1.6% q/q vs 0.5% q/q as expected. Rebound in activity was praised and it forced some analysts (ANZ) to move their projections for a rate hike toward February of 2022. GDT price index came in at -1.3%, thus making it fifth consecutive auction of falling prices. Despite great GDP data USD strength proved too much for Kiwi as NZDUSD dropped below the 0.70 level.


Manufacturing sales in April came in at -2.1% m/m vs -1.1% m/m as expected. Sales were down in 11 out of 21 industries and were led by transport equipment and petroleum as well as coal products. The reimposed lockdowns in April had an adverse effect on sales with them falling almost double as expected while March reading was upwardly revised. Inflation continued to increase and it came in at 3.6% y/y vs 3.5% y/y as expected and up from 3.4% y/y the previous month. Main contributors to the rise in prices were prices for shelter and durable goods. Core measures also continued to increase with median and trimmed versions above 2% and common core reading getting close to it at 1.8% y/y.

BOC Governor Macklem stated his satisfaction with economic recovery so far adding that complete recovery will take some time. However, stimulus is still needed as large parts of the economy remain weak. Incoming inflation numbers reflect base effects. The bank is aware of recent CAD strength and has taken it into consideration as it could cut exports, particularly exports of services.


BOJ left the rate unchanged at -0.1% as was widely expected. Economy is hit hard by the pandemic but slowly picking up. That is why the bank decided to extend pandemic relief program after September of 2021 until March of 2022. Exports and output are showing steady increases while consumption is stagnating. Governor Kuroda stated their readiness to ease monetary policy further if need arises adding that there is need to continue with monetary easing to achieve a 2% inflation target. With national inflation printing -0.1% y/y in May, that target will not be reached any time soon. Prime Minister Yoshihide Suga stated that state of emergency in Tokyo will end on June 20. State of emergency will also end for other prefectures as start of Olympic Games (July 23) draws nearer.


SNB has left the policy rate unchanged at -0.75% as was widely expected. Standard statements such as Swiss franc remains highly valued and bank’s readiness to intervene in the FX market if needed were flaunted. Inflation for 2021 is now seen averaging at 0.4% vs 0.2% as previously expected while GDP is seen at 3.5%. SNB total sight deposits for the week ending June 11 came in at CHF711bn vs CHF710.8bn the previous week.

You can follow all economic events on the Economic Calendar page on our Website. MT server time is set to GMT+3 and if you need assistance converting MT 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 our accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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