​GBP is bought and sold on Brexit news (Weekly Review)

2018-09-25
The most important events of the macroeconomic calendar of the past week include the meeting of the Bank of Japan, publication of inflation data for the UK and the meeting of the Swiss National Bank. Both Central Banks, as predicted by analysts and participants in the financial markets, put no changes to their monetary policies, so these events caused virtually no reaction. The Swiss franc was sold on growth, as a result of which it finished the week with a decline against a number of its competitors, in particular, paired with the US dollar, where the differential of interest rates still does not justify the sell-off of the USD.

Due to similar reasons, the Japanese yen, despite the aggravation of the trade conflict between the USA and the PRC, last week remained largely under pressure. Smaller than expected, duty rates on Chinese imports returned investors' appetite for risks, against which the bull market sentiment reigned on the stock markets, which, along with the interest rate differential, traditionally contributed to the growth of the USD against the JPY. Nevertheless, in case of further downward correction in the stock markets, the JPY will be in certain demand, therefore bulls for USD/JPY should be extremely cautious.

Released data on consumer inflation in the UK exceeded forecasts of analysts, and contributed to the preservation of demand for the GBP. At the same time, the main factor that influences its dynamics remains the country's exit from the European Union, so major influence on the pound continues to be provided by incoming news on this subject, where optimistic sentiments may sharply change to pessimistic ones, just like happened last week. Thus, the news that the EU leaders rejected the proposal of Theresa May provoked sell-off of the pound, which had previously grown due to hopes of a positive outcome of the negotiations, and it completed the week by returning to support 1.3060, which increases the risk of testing 1.3000.

Schedule for this week:

Monday, September 24
08:00 GMT – Germany. IFO Business Expectations;
08:00 GMT – Germany. IFO Business Climate Index;
12:30 GMT – USA. Chicago Fed National Activity.

Tuesday, September 25
23:50 GMT – Japan. BoJ Monetary Policy Meeting;
05:30 GMT – Japan. Bank of Japan Governor Kuroda Speaks;
12:55 GMT – USA. Redbook Index;
13:00 GMT – USA. House Price Index;
13:00 GMT – USA. S&P/CaseShiller House Price Index (YoY) (Jul).

Wednesday, September 26
23:45 GMT – New Zealand. Trade Balance;
23:45 GMT – New Zealand. Import/Export;
13:00 GMT – Switzerland. Swiss National Bank (SNB) Quarterly Bulletin;
14:00 GMT – USA. New Home Sales;
18:00 GMT – USA. Federal Reserve Interest Rate Decision;
18:00 GMT – USA. Federal Open Market Committee (FOMC) Statement on monetary policy;
18:00 GMT – USA. Jerome Powell Speaks;
18:00 GMT – USA. Federal Open Market Committee (FOMC) Economic Projections;
18:30 GMT – USA. Federal Open Market Committee (FOMC) Press Conference.


Thursday, September 27
21:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Interest Rate Decision;
21:00 GMT - New Zealand. Reserve Bank of New Zealand Monetary Policy Statement;
21:00 GMT - New Zealand.  Reserve Bank of New Zealand Rate Statement;
22:00 GMT - New Zealand. Reserve Bank of New Zealand Press Conference;

06:00 GMT – Germany. Gfk German Consumer Climate Index;
06:35 GMT – Japan. Bank of Japan Governor Kuroda Speaks;
09:00 GMT – Eurozone. Business Climate indicator;
09:00 GMT – Eurozone. Services Sentiment;
09:00 GMT – Eurozone. Industrial Sentiment;
11:45 GMT – United Kingdom. Bank of England (BoE) Monetary Policy Committee (MPC) Member Haldane Speaks;
12:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:00 GMT – Germany. Consumer Price Index (CPI);

12:30 GMT – USA. Durable Goods Orders;
12:30 GMT – USA. Personal Consumption Expenditure (PCE) Prices;
12:30 GMT – USA. GDP (YoY) (Q2);
12:30 GMT – USA. GDP (Q2);
12:30 GMT – USA. Initial Jobless Claims.

Friday, September 28
22:45 GMT – New Zealand. Building Consents;
23:30 GMT – Japan. Unemployment Rate;
23:30 GMT – Japan. Consumer Price Index (CPI);
23:30 GMT – Japan. Jobs/applications ratio;
23:50 GMT – Japan Retail Sales;
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
23:50 GMT – Japan. Foreign Bonds Buying;
01:45 GMT – PRC. Caixin Manufacturing Purchasing Managers Index (PMI);
07:55 GMT – Germany. Unemployment Rate;
08:30 GMT – United Kingdom. GDP;
09:00 GMT – Eurozone. Core Consumer Price Index (CPI);
09:00 GMT - Eurozone. Consumer Price Index (CPI);

12:30 GMT – Canada. GDP;
12:30 GMT – USA.  Personal Spending;
12:30 GMT - USA. Personal Income;
13:45 GMT - USA. Chicago Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst

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