The Growth of "Risky" Assets is Suspended, and a Large-scale Correction is Possible (Weekly Review)

Relaunch of the PRC, US, and Eurozone economies positively affected the “risky” assets. Getting rid of the USD, investors bought back the EUR, the GBP, the AUD, and the NZD. Thus, the main competitors of the USD were able to win back most of the losses incurred at the peak of the spread of coronavirus, but their correctional recovery was suspended last week.

One of the factors negatively affecting the GBP was the release of GDP data for April, which showed a sharp drop of 20.4% in monthly terms. It could cool the heat of the bulls on the GBP and forced to get rid of long positions, and the GBP/USD closed the week with a fall slightly below 1.2500. The lack of progress in trade negotiations with the EU and fears of the negative consequences of the coronavirus will put pressure on the GBP, so continued growth seems unlikely.

The aggravation of relations between the United States and China, which could cause a new stage in the trade war between the countries, contributed to the suspension of the growth of Aussies and Kiwis against the American. Bulls may attempt this week to maintain control of the situation, but their upward rebounds will most likely be used to eliminate longs. So updating the highs at this stage is hardly to be expected. The same goes for the EUR, which could suffer from the negative effects of coronavirus in the Eurozone.

Schedule for this week:

Monday, June 15
09:00 GMT - Eurozone. Trade Balance;
20:00 GMT - USA. US Foreign Buying, T-bonds (Apr).

Tuesday, June 16
01:30 GMT - Australia. Reserve Bank of Australia Meeting Minutes;
03:00 GMT - Japan. Bank of Japan (BOJ) Interest Rate Decision;
03:00 GMT - Japan. Bank of Japan (BOJ) Press Conference and Monetary Policy Report;
06:00 GMT - United Kingdom. ILO Unemployment Rate (3M) (Apr);
06:00 GMT - Japan. Bank of Japan (BOJ) Press Conference;
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
09:00 GMT - Eurozone. ZEW Economic Sentiment;
12:30 GMT - USA. Retail Sales;
13:15 GMT - USA. Industrial Production;
14:00 GMT - USA. Fed Chair Powell Testifies.

Wednesday, June 17
23:50 GMT - Japan. Trade Balance;
06:00 GMT - United Kingdom. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Consumer Price Index (CPI);
12:30 GMT - Canada. Bank of Canada Core Consumer Price Index (CPI);
12:30 GMT - USA. Housing Starts (MoM) (May).

Thursday, June 18
22:45 GMT - New Zealand. GDP (QoQ) (Q1);
01:30 GMT - Australia. Unemployment Rate;
01:30 GMT - Australia. Employment Rate;
07:30 GMT - Switzerland. Swiss National Bank (SNB) Interest Rate Decision;
07:30 GMT - Switzerland. Swiss National Bank (SNB) Monetary Policy Report;
08:00 GMT - Switzerland. Swiss National Bank (SNB) Press Conference;
11:00 GMT - United Kingdom. Bank of England (BOE) Interest Rate Decision;
11:00 GMT - United Kingdom. Bank of England (BOE) Meeting Minutes;
12:30 GMT - USA. Initial Jobless Claims.

Friday, June 19
23:30 GMT - Japan. National Consumer Price Index (CPI);
23:50 GMT - Japan. Monetary Policy Meeting Minutes;
06:00 GMT - United Kingdom. Retail Sales;
12:30 GMT - Canada. Retail Sales;
17:00 GMT - USA. Fed Chair Powell Speaks.

Author: Anthony Porter, IAFT Analyst