Weekly Currency News: Fed Interest Rate Decision
12 June 2016 · 3 min read
Starting the week at a range 1.1400, the dollar finished the week strong against the other major currencies after data from the U.S. Consumer Sentiment deteriorated less than expected, adding to the optimism over the strength of the economy.
The pound continues highly volatile approaching the Brexit decision. The pair raised to 0.7900, the highest since May. This packed full week of economic data will consolidate the trend.
This week, all eyes are on the interest rate decisión of US, UK, Japan and Switzerland.
Last week in currency markets
- EUR/USD: started on range 1,1400, finished 1,1250
- GBP/USD: tumbled 1.39% on Friday at 1.4258
- EUR/GBP: stayed on 0,7800/0,7950 range
- USD/JPY: plunges to 106,13
Main events this week:
In the U.S, the main event will be Fed Interest Rate Decision on Wednesday. The market has already discounted that rate decision will be to maintain the 0,5% giving, the CME Group FedWatch tool, just 1,9% of probability to hike the rates. Many important data will be released this week for the USD, the strength of the indicators will anticipate the possibility of hike or not in this 2016.
On Tuesday, the Industrial Production of Eurozone will be released. According the preliminary reading, euro industrial production advanced to 0,5% from the previous -0,80% reading. The data of this indicator will demonstrate if Mario Draghi monetary policy its being reflect on the macroeconomic data.
On Tuesday, the Consumer Price Index will be released. After finishing the week on same levels of first week of May, sterling needs solid economic data to support the volatility created by the polls of “Brexit” decision.
On Thursday we will have the release of the Retail Sales data. Sterling was sharply lower, as GBP/USD tumbled 1.39% on Friday at 1.4258. Ongoing uncertainty over the continuity of Britain in the European Union after June 23rd referendum has led the pound pairs end the week down 1.8%.
The main indicators of in the Japanese calendar will be released on Monday:
April’s household spending is seen contracting for second consecutive month. Consumption has declined in five out of the last six months, which casts serious doubts about the momentum of Japanese economy.
At the same time, the preliminary Japanese industrial production is likely to show a contraction in factory output, adding concerns about the economy. The yen might suffer on Monday it the final readings confirm the negative consensus on an string of Japanese indicators.