RedFX Update: Stay alert this week
As the US economy prints yet more robust economic data, all eyes are on the UK and EU to see how far they will raise rates and the subsequent speed of the economic slowdowns that will bring. The market will focus on US Central Bank minutes, published on Wednesday evening, for clues as to how aggressively they will re-start raising interest rates. After that, Friday’s all-important US employment data will add volatility to FX markets. EU President Lagarde speaks on Friday as well – the markets are looking for clues as to how far the ECB will raise rates.
Strong data has given renewed strength to GBP recently, despite inflation remaining stubbornly above 8.5% and expectations that UK interest rates will rise to the 6.5% level.
Due to inflation and high rates, there is a great deal of scepticism about the medium-term performance of GBP, with many economists expecting the UK economy to slow yet further and for growth to reduce more.
GBP/EUR remains range-bound at 1.1650 and GBP/USD has ranged between 1.2600 and 1.2725 in reaction to the USD moves.
The US saw a huge GDP number last week which confirmed continued strong growth of the US economy and buoyed the USD. However, the USD has slowly undone that move and EUR/USD and GBP have regained their levels at 1.0900 and 1.2700 respectively. The Fed will be closely watching Friday’s employment data.
(ECB) policymaker Peter Kazimir said in June,
“we need to raise rates again in July.”
This maintained EUR/USD above 1.0900 in slow trading today due to the US holiday later this week – EUR/USD has bounced around this level throughout June.
Main events of the week:
Tuesday: Australia Interest Rate decision & statement / Canada Manufacturing data
Wednesday: Chinese services data / EUR Producer Prices / US Central Bank minutes of previous meeting
Thursday: EU Retail Sales / US employment & services data
Friday: UK Retail Sales / UK Services data / EUR Purchasing Managers Index / US Fed speakers
More news
