Weekly Outlook 6th of May - 10th of May, 2019

2019-05-06

Last week, the Dollar mostly slightly lost its position in relation to the main basket of currencies - the greatest weakening was against the British Pound - 2.1%, other currencies - Canadian dollar -0.24%, Euro –0.57%, Japanese Yen - 0.45%. The New Zealand dollar -0.26%, the Swiss franc -0.29%.

 

US stock markets mostly fell slightly over the past week, which could not but have a negative impact on the Currency itself. The negative dynamics of GOOG shares provoked the fall of most other shares of the popular FAANG group: Facebook (FB), Amazon (AMZN) and Apple (AAPL). According to the report of the Ministry of Commerce, consumer spending in the United States in March rose to a maximum value in nine and a half years. Market participants also continued to closely monitor the course of trade negotiations between the US and China. Core inflation is below the Fed's target level of 2%, which can be alarming if it persists, as some key indicators of economic activity slowed down, the Fed decided to leave the federal funds rate in the range of 2.25% -2.5% .

 

Last week, the meeting of the central bank of Great Britain was the first after Brexit was postponed for six months. The Bank of England retained the interest rate value unchanged at 0.75% and improved the outlook for economic growth. The Bank of England gave a forecast of the country's economic growth by 1.5% this year, raising it compared with the growth forecast of 1.2%, which it gave in February. Nevertheless For today the mixed background is formed. On the one hand, we can expect the value of the British pound against the background of the negative dynamics of the debt market, where the yield on 10-year UK government bonds is declining relative to counterparts from the United States and Germany. Investors are disappointed with the pessimistic comments of the head of the Bank of England M. Carney, who pointed to a possible strong recession in the United Kingdom’s economy at the end of the year, after Britain’s exit from the EU. On the other hand, the growth of oil prices may support the pound, as there is a correlation between GBP / USD and BRENT. Oil rises in price on the back of reduced supplies of hydrocarbons from Iran and Venezuela.

 

The data on growth in the Eurozone for the 1st quarter turned out to be stronger than expectations, dissipating part of the negative around the forecast for the Euro. Eurozone economic growth was stronger than expected in the first quarter, recovering significantly after a recession in the second half of 2018, while unemployment fell to its lowest level in more than a decade. The euro at the start of the new five-day week could demonstrate an increase in quotations for two reasons. First, Eurostat last Friday gave a surprise to investors - the inflation rate in April reached 1.7%, which is the maximum level in the last six months. This is a good sign for a single European currency.

 

Bitcoin started May with shock growth, having updated April highs on Friday (+ 11% for the week). According to CoinMarketCap, the highest value ($ 5884) reached its first cryptocurrency on Saturday, May 4. At the same time, the BTC capitalization rose above $ 103 billion, and the dominance index approached 56%. The most successful indicators for the week showed Bitcoin Cash. Spurred on by the news about the future implementation of Schnorr's signatures, this cryptocurrency has risen in price by 18% in the past seven days, at some point exceeding the $ 300 mark.

   

We present to your attention a list of news that according to analysts of our company can have the greatest impact on the market next week:

 

Monday May 6

Eurozone - Speech of ECB member Lautenschläger, Business Services Index in the Services Sector, Composite Business Activity Index. The index of business activity in the services sector in Germany, France, Italy, Spain, The volume of retail sales in the Eurozone

Canada - Speech by Bank of Canada Head Poloz

 

Tuesday May 7

Australia - Retail Sales - Trade Balance. Expected Inflation, RBA Interest Rate Decision

Eurozone - German Factory Orders, German Industrial Production.

United Kingdom - Housing Price Index, Speech by a member of the Monetary Policy Committee, Speech by a representative of the Bank of England.

Canada - Ivey PMI - Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

USA - Number of open vacancies in the labor market from the Bureau of Labor Statistics. Weekly Crude Oil Stocks

 

Wednesday May 8

Japan - Minutes of the monetary policy meeting,

New Zealand - Interest Rate Decision, RBNZ Monetary Policy Report, RBNZ Press Conference

Switzerland - Unemployment Rate in Switzerland with seasonal and non-seasonal changes

Eurozone - German Industrial Production, Publication of the minutes of the ECB meeting on monetary policy. Speech by the ECB President Draghi.

United States - Crude Oil Reserves

 

Thursday May 9

United Kingdom - Housing Price Balance, Retail Sales,

USA - Speech by Fed Chairman Mr. Powell, Traders are closely watching his speeches, which serve as an unofficial source of information about the future monetary policy of the country. The number of initial claims for unemployment benefits, the volume of imports, exports.

 

Friday May 10

Japan - household spending index.

Eurozone - Germany's Trade Balance - Indicators are higher than expected, viewed as bullish EUR direction, and indicators below expected indicate a bear market for EUR.

United Kingdom - Production in the manufacturing industry, GDP data, The volume of industrial production.

US - Basic Consumer Price Index