​GBP couldn’t take advantage of the rate increase by the ECB (Weekly Review)

2018-08-06
The last week’s macroeconomic calendar was full of important events that could have rock markets, but in general it didn’t happen. Among those events we should list the meeting of the Bank of Japan, the Federal Open Market Committee of the US Federal Reserve System and the Bank of England, as well as the publication of unemployment/employment data in the nonagricultural sector of the United States, on which investors traditionally focus their attention, because the US Federal Reserve System follows them (and not just them) when making decision about its interest rate.

In full accordance with the vision of analysts and financial market participants, the Bank of Japan didn’t increase its interest rate and phase out its asset-purchase program. Changes made by the central bank to its monetary policy weren’t significant, however, despite this and stock index increase, USD/JPY pair ended up this week close to 111th figure, which increases the risk of decline to 110.00. The US Federal Reserve System also didn’t increase its interest rate, which wasn’t surprising too. But the tone of the accompanying statement was “hard” enough for the US dollar to avoid being massively sold out.

By increasing its interest rate, the Bank of England also lived up the expectation of analysts and market participants. However, GBP didn’t receive any support from comments and was sold, as a result of which it got lower the psychological level of 1.3000. The instability caused by the Brexit continues to have a detrimental effect on the GBP’s dynamics and its decline after the interest rate increase by the Central Bank of England must be taken seriously by bulls, because it reflects the considerable increase risks of declines in the direction of 28th figure. However, having consolidated its position above 1.3000 and having broken 31st figure, GBP scuttles all negative of the last week.

Schedule for this week:

Monday, 6th of August
08:30 GMT – Eurozone. Sentix investor confidence;
15:00 GMT – USA. Lending expert survey (fourth quarter)

Tuesday, 7th of August
02:00 GMT – China. Currency reserves;
04:30 GMT – Australia. Interest rate decision by the Reserve Bank of Australia;
04:30 GMT – Australia. Accompanying statement by the Reserve Bank of Australia;

05:00 GMT – Japan. Leading indicator index;
06:00 GMT – Germany. Trade balance;
06:00 GMT – Germany. Import/export;
06:00 GMT – Germany. Industrial production;
12:55 GMT – USA. Redbook retail sales index (MoM) (30th of July, 2018);
14:00 GMT – USA. Milk product price index;
14:00 GMT - Canada. Ivey business index

Wednesday, 8th of August
00:30 GMT – Australia. Westpac consumer confidence index;
01:30 GMT – Australia. Real estate loan;
02:00 GMT - China. Trade balance;
02:00 GMT – China. Import/export;
03:00 GMT – New Zealand. Inflation expectations of the Reserve Bank of New Zealand (qtr/qtr) (second quarter);
03:05 GMT – New Zealand. Speech by the head of the Reserve Bank of Australia Mr. Philip Lowe;
11:00 GMT – USA. МВА mortgage lending index

Thursday, 9th of August
21:00 GMT – New Zealand. Interest rate decision by the Reserve Bank of New Zealand;
21:00 GMT – New Zealand. Accompanying statement of the Reserve Bank of New Zealand;
21:00 GMT – New Zealand. Comments on monetary policy;
21:00 GMT – New Zealand. Press-conference of the Reserve Bank of New Zealand;

23:50 GMT – Japan. Foreign investments in the Japan stocks;
23:50 GMT – Japan. Investments in foreign obligations;
01:00 GMT – Australia. Consumer price inflation expectations;
01:30 GMT – China. Producer price index;
08:00 GMT – Eurozone. Economic bulletin;
12:15 GMT – Canada. House building starts;
12:30 GMT – Canada. House price index on the primary market;
12:30 GMT – USA. First applications for unemployment compensation;
12:30 GMT – USA. Producer price index without food commodities and energy sources

Friday, 10th of August
22:30 GMT – New Zealand. Business index in the production sector of New Zealand;
23:50 GMT – Japan. Gross domestic product;
23:50 GMT – Japan. Gross domestic product annual data (second quarter);
01:30 GMT – Australia. Monetary policy comments by the Reserve Bank of Australia;
08:30 GMT – Great Britain. Gross domestic product;

08:30 GMT – Great Britain. Production in the processing sector;
12:30 GMT – Canada. Change in number of employed persons;
12:30 GMT – Canada. Unemployment level;
12:30 GMT – USA. Consumer price index;
12:30 GMT – USA. Core consumer price index.

Author: Anthony Porter, IAFT Analyst

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