The market sentiment improved amid the slowdown in virus cases. Let's have a closer look at the AUD, S&P 500, gold and the GBP.
5 important things this week will bring us
- Parliament Brexit Vote (Tue, tentative) – On Monday, Theresa May must decide whether the Brexit deal will be presented to the Parliament or it will be postponed. Earlier, Theresa May reached an agreement on Brexit with the European Union. Now, the final word belongs to the Parliament, which is due to decide on the approval of the agreement. The decision on the “Irish backstop” still remains the main subject of disagreement. Theresa May and the Cabinet have already lost the support of the Northern Irish DUP and many pro-Brexit members of the Conservative party. There is a fear that the government will fail to pass the deal. This will make the GBP fall sharply.
- US PPI and core PPI m/m – (Tue, 15:30 MT (13:30 GMT) time) – The level of producer price index is expected to stay at the same level, while core PPI will likely to increase by 0.1%. Higher-than-expected data will make the USD rise.
- US CPI and core CPI m/m – (Wed, 15:30 MT (13:30 GMT) time) – Analysts anticipate the level of headline consumer price index to stay at the same level. As for core CPI excluding food and energy, it is forecast to advance by 0.2%. The actual figures will provide the new data for the Fed ahead of its rate decision.
- ECB rate decision and press conference – (Thu, 14:45 MT and 15:30 MT (12:45 and 13:30 GMT) time) – The European Central bank plans to end its quantitative easing policy at the end of 2018. We await the ECB to confirm this move. At the same time, we anticipate the ECB president Mario Draghi to provide the hints on the further steps of the central bank’s monetary policy. Analysts see the first rate hike at the end of 2019 or even in 2020, but the hawkish tone of the ECB can support the euro.
- US retail sales and core retail sales m/m (Fri, 15:30 MT (13:30 GMT) time) - Experts see the level of headline retail sales to increase by 0.1%. As for the core level, it will advance by 0.2%. Higher data will push the USD up.
- The tensions between the US and China escalated after the Huawei Technologies Co. chief financial officer Meng Wanzhou was arrested in Canada on the orders of US authorities. Yesterday, Chinese vice foreign minister Le Yucheng has summoned the US Ambassador to China. He said the US actions were against the legitimate rights and interests of Chinese citizens. He also added that China will take further actions if needed. It increased the risk-off sentiment across the markets.
- According to headlines, Italian prime minister Giuseppe Conte and the president of European Commission Jean-Claude Juncker may meet on Wednesday to discuss the new deficit target for Italian budget. For now, the government cannot reach an agreement on the budget target. The financial minister Tria insists on the lower than 2% target, while other members of the government don’t want to pull it lower than 2.1%. They hope to submit a new budget plan before the EU summit on Thursday.
- The price for crude oil steadied after the OPEC+ members agreed on production cuts on Monday.
Have a successful week of trading!
The overall market sentiment is mixed as new virus cases continue rising throughout the world, but most economic indicators came out better than analysts expected. Let’s look at the main market movements.
The market sentiment switched to risk-off after the Fed’s Powell statement. The USD edged higher, while risker assets started falling after reaching quite high levels. Let’s have a closer look.
The US NFP will be published on August 7 at 15:30 MT time.
The market sentiment is indeed risk-on today. Stocks, riskier currencies and gold are rising amid the waning US dollar.
Follow the BOE monetary policy and rate statements on August 6 at 14:00 MT time…