Next week will be particularly heavy in terms of events, including the historic meeting between US President Trump and North Korean leader Kim Jong un, policy decisions (Fed and ECB meetings on 13th and 14th June, respectively) and tier-1 macro data, including in the US, Eurozone and UK. This could prove to be a pivotal week for markets, including currencies.
Monday 11th June
Australia: Public holiday:
United Kingdom: April industrial production. Industrial output growth has recovered briskly since December and hit 2.9% yoy in March but with industry accounting for only 20% of the UK economy markets are more likely to remain focussed on the far more important services sector.
Tuesday 12th June
Global: Meeting between US President Trump and North Korean leader Kim Jong un in Singapore, which may extend to 13th June. There is no precedent for a meeting between the leader of the US and North Korea and with Trump unpredictable at best and Kim Jong un somewhat still of an unknown quantity the outcome is difficult to predict. However, with both leaders having invested much political capital in this meeting, they will arguably be keen to at least secure some headline victories. This may give global risk appetite and the Dollar a boost but the devil will be in the detail and the ability and willingness of both leaders to stick to agreed promises, however vague.
United States: CPI-inflation (May). Measures of US inflation have risen only slowly which seems to have anchored FOMC members’ thinking that only two more rate hikes will be needed before end-year.
Eurozone: German ZEW economic sentiment index (June). Economic growth has seemingly not recovered much after a disappointing Q1 and this release will be another important part of the German growth puzzle.
Eurozone: Italy 12-month bill auction. This will be the first bill auction since the political chaos in Italy two weeks ago and will be a good litmus test of the market’s confidence in the new Italian government and its plans to loosen fiscal policy.
United Kingdom: House of Commons votes on EU Withdrawal Bill (to conclude on 13 June). The ruling Conservative Party suffered 14 defeats in the House of Lords and may well suffer more defeats in the scheduled House of Commons votes. This would not derail the UK’s planned exit from the European Union in March 2019 but will give further insight as to the kind of trading arrangements the UK is seeking with the EU.
United Kingdom: Labour market data (April). The British labour market has remained strong – as measured by a very low unemployment rate – but this has not yet translated into a material pick-up in real wage growth. Evidence that wage growth is outstripping inflation, even modestly, is probably a necessary if not sufficient condition for the Bank of England to seriously consider a rate hike at its August policy meeting.
Australia: Home loans (May), NAB Business confidence (May)
Wednesday 13th June
United States: PPI-inflation (May)
United States: Federal Reserve meeting, press conference and updated forecasts. The consensus forecast is that the Fed will hike rates 25bp and this is almost fully priced in by markets so the focus will likely be on the press conference and updated quarterly economic forecasts. In particular markets will be looking for clues as to whether some of the FOMC members may be thinking that three, rather than two, more rate hikes this year would be appropriate given signs that US economic growth re-accelerated in Q2.
Eurozone: Industrial output (April). Eurozone economic growth was soft in Q1 and industrial output growth slowed further in Germany in April.
United Kingdom: CPI and PPI-inflation (May). CPI-inflation slowed for the third consecutive month in April to 2.4% yoy and may have slowed further in May as the inflationary impact of Sterling depreciation continues to fade.
United Kingdom: House Price Index (April).
Australia: Westpac Consumer Sentiment Index (June)
Thursday 14th June
United States: Retail sales (May). Macro data suggest that US GDP growth recovered briskly in Q2 2018 and retail sales growth has remained near 5% yoy in the past three months. Another print of this magnitude would likely further point to stronger US economic growth this quarter.
Eurozone: ECB policy meeting, President Draghi press conference and updated forecasts. A number of ECB board members have in recent days confirmed that the ECB will discuss at its 14th June meeting the possibility of ending its quantitative easing program. The consensus forecast is that the ECB will announce (or at least hint) that it will gradually reduce its monthly net bond purchases from currently € 30bn to zero by end-2018. This may be enough to give the Euro another leg-up but there is still a non-negligible risk that the ECB delays this important decision.
United Kingdom: Retail sales (May)
Australia: Labour market data (May)
Friday 15th June
United States: US to announce list of Chinese imports subject to 25% import tariff.
United States: Empire State Manufacturing (June), Industrial output (May) and Michigan Consumer Sentiment (June)
