Financial Markets Participants Still Remain Cautious (Weekly Review)

Last week we observed relative calmness in the financial markets. Increased fears of a new wave of the coronavirus pandemic in the PRC, the USA and Europe have supported such “risky” assets as the JPY and Gold, which, being in demand, have shown growth; at the same time, the USD, also bought in troubled times, strengthened against a number of its competitors, in particular against the EUR and the GBP.

Negative mood related to the GBP is still preserved, even despite several positive trends that have been outlined in the negotiations between the United Kingdom and the European Union. Pressure on the GBP intensified after the announcement of the meeting of the Bank of England, which decided to expand the asset purchase program. The decline in the GBP/USD, however, at this stage should be considered corrective, since the market can show a tendency to change the attitude towards the USD, and as a result the GBP can again show its strength.

Concerns about the possibility of a new wave of the coronavirus pandemic prevented stock indices from further growth, and when they were under pressure at the end of the week, they retreated from weekly highs, although demand is still falling during recessions. Thus, we may well see an update of the current highs, which may trigger the correction of the JPY, and the USD/JPY can push off support at 106.75 and develop a correction in the direction of the 108th figure.

Schedule for this week:

Monday, June 22
12:00 GMT - Germany. German Bundesbank President Weidmann Speaks;
15:00 GMT - Canada. BoC Gov Council Member Macklem Speaks.

Tuesday, June 23
07:30 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:30 GMT - United Kingdom. Markit Services Purchasing Managers Index (PMI);
13:45 GMT - USA. Markit Manufacturing Purchasing Managers Index (PMI).

Wednesday, June 24
02:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Interest Rate Decision;
02:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Rate Statement;
08:00 GMT - Germany. IFO Business Climate Index;
08:00 GMT - Germany. IFO Business Expectations;
13:30 GMT - United Kingdom. Inflation Report Hearings.

Thursday, June 25
22:45 GMT - New Zealand. Trade Balance;
06:00 GMT - Germany. Gfk Consumer Confidence;
11:30 GMT - Eurozone. ECB Monetary Policy Report;
12:30 GMT - USA. Durable Goods Orders;
12:30 GMT - USA. GDP.

Friday, June 26
23:30 GMT - Japan. Consumer Price Index (CPI);
12:30 GMT - USA. PCE Price Index;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst