The Fall of the USD Against Some of Its Competitors Can Be Used for Buying (Weekly Review)

Last week macroeconomic calendar contained a number of important events, among which one should highlight the meetings of the Reserve Bank of Australia and the European Central Bank, as well as the release of the US labor market data. RBA decided to lower the interest rate level, but participants in the foreign exchange market continued to record profits on short positions in the AUD, which was able to test the level of 0.7022 paired with the USD. However, along with the US trade war with China, its positions remain vulnerable, and it can resume the decline.

Contrary to expectations of some analysts, ECB put no changes to its monetary policy, which, along with its inflation forecasts, contributed to the continued demand for the euro. Continuing growth against the USD, it rose to the level of 1.1347, where, as one would expect, the interest for sale was noted. Economic and political risks in Italy, differential in interest rates, and sluggish growth rates still do not justify buying a single currency, which still risks to be in the 12th figure.

The release of weak US employment reports also contributed to recovery of a number of the USD competitors. The first disappointment was the ADP report, the next one was the Nonfarm Payrolls, which raised expectations for the US Federal Reserve to lower the interest rate this year. However, the unemployment rate remains low, and this may somewhat offset the negative effect of weak reports. Thus, the USD can be bought back on the decline, but in the long run, its position may falter.

Schedule for this week:

Monday, June 10
08:30 GMT – United Kingdom. GDP (MoM) (Apr);
08:30 GMT – United Kingdom. Manufacturing Production;
08:30 GMT - United Kingdom. Industrial Production;
12:30 GMT - Canada. Building Permits;
17:00 GMT – United Kingdom. BoE MPC Member Saunders Speaks.

Tuesday, June 11
08:30 GMT - United Kingdom. Average Earnings ex Bonus;
08:30 GMT - United Kingdom. ILO Unemployment Rate (3M) (Apr);
12:30 GMT - USA. Producer Price Index (PPI) excluding food and energy;
12:55 GMT - USA. Redbook Index.

Wednesday, June 12
22:45 GMT – New Zealand. Electronic Card Retail Sales;
23:25 GMT - Australia. Reserve Bank of Australia Assistant Governor Kent Speaks;
23:50 GMT - Japan. Machinery Orders;
00:30 GMT - Australia. Westpac Consumer Confidence;
01:30 GMT - PRC. Consumer Price Index (CPI);
01:30 GMT - PRC. Producer Price Index (PPI);
02:15 GMT - PRC. Foreign Direct Investment (FDI);
08:15 GMT – Eurozone. European Central Bank President Draghi Speaks;
12:30 GMT - USA. Consumer Price Index (CPI);
12:30 GMT - USA. Core Consumer Price Index (CPI);
12:30 GMT - USA. Consumer Price Index (CPI) excluding food and energy;
18:00 GMT - USA. Federal Budget Balance (May).

Thursday, June 13
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
00:00 GMT - Australia. Inflation Expectations;
01:30 GMT - Australia. Unemployment Rate;
01:30 GMT - Australia. Employment Rate;
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
07:30 GMT – Switzerland. SNB Interest Rate Decision;
07:30 GMT - Switzerland. SNB Monetary Policy Assessment;
08:00 GMT - Switzerland. SNB Press Conference;
09:00 GMT - Eurozone. Industrial Production;
12:30 GMT - USA. Initial Jobless Claims.

Friday, June 14
22:30 GMT – New Zealand. Business Purchasing Managers Index (PMI);
02:00 GMT - PRC. NBS Press Conference;
02:00 GMT - PRC. Industrial Production;
02:00 GMT - PRC. Retail Sales;
04:30 GMT - Japan. Industrial Production;
12:30 GMT - USA. Retail Sales;
12:15 GMT - USA. Industrial Production;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst