Forecasting the upcoming week: The Fed is broadly expected to keep rates unchanged

Despite Friday’s strong reversal, it was quite a dreadful week for the US Dollar (USD), which added to the previous weekly decline and slipped back to multi-year troughs, particularly in response to weaker inflation figures and subsequent repricing of extra rate cuts by the Federal Reserve in the second half of the year.

The US Dollar Index (DXY) added to the previous weekly pullback, this time retreating below the 98.00 support for the first time since March 2022. The NY Empire State Manufacturing Index kickstarts the weekly calendar on June 16. The always relevant Retail Sales will take centre stage on June 17, along with Import and Export Prices, Industrial and Manufacturing Production, Capacity Utilization, Business Inventories, the NAHB Housing Market Index, and the weekly API report on US crude oil inventories. The weekly MBA Mortgage Applications are due on June 18, followed by the weekly Initial Jobless Claims, Housing Starts, Building Permits, Net Long-term TIC Flows, and the EIA’s weekly report on US crude oil inventories. There will be no activity in the US markets on June 19 due to the Juneteenth holiday. The Philly Fed Manufacturing Index will wrap up the docket on June 20, seconded by the CB Leading Index.

EUR/USD extended further its upside momentum, advancing for the second week in a row and managing to trespass the 1.1600 barrier to hit fresh multi-year highs. On June 16, the ECB will publish its final print of the Q1 Labour Cost Index and the Wage Growth figures. The ZEW institute will release its Economic Sentiment gauge in Germany and Euroland on June 17. The EMU’s final Inflation Rate will be the salient event on June 18 along with the Current Account results. The Construction Output in the broad bloc is due on June 19, seconded by the Eurogroup Meetings. On June 20, Germany will publish its Producer Prices, while the European Commission will release its preliminary Consumer Confidence print, ahead of the ECOFIN Meeting.

In line with the rest of the risk complex, GBP/USD added to the previous week’s advance, trespassing once again the 1.3600 milestone to hit new highs. The UK Inflation Rate is expected on June 18, while Retail Sales, the GfK Consumer Confidence, and Public Sector Net Borrowing figures are all due on June 20.

Further gains in the Japanese currency motivated USD/JPY to set aside two weekly advances in a row and clinch a decent decline in the past five days. The Reuters Tankan Index is due on June 18, followed by Balance of Trade results and Machinery Orders. Weekly Foreign Bond Investment readings are due on June 19. The key Inflation Rate will be disclosed on June 20, alongside the BoJ Minutes.

AUD/USD clocked a new yearly peak near 0.6550 amid another positive week, although that move lacked follow-through. The Westpac Leading Index is due on June 18, ahead of the always relevant labour market report on June 19.

Anticipating economic perspectives: Voices on the horizon

- The ECB’s Nagel speaks on June 16.

- The BoC’s Macklem will speak on June 18.

- The ECB’s Nagel is due to speak on June 19.

- The BoJ’s Ueda speaks on June 20.

Central banks: Upcoming meetings to shape monetary policies

- The BoJ (act. 0.50% vs. 0.50% exp.) meets on June 17.

- The Riksbank will decide on rates on June 18 (2.25% act. vs. 2.25% exp.), alongside the BI (5.50% act. vs. 5.50% exp.) and the Federal Reserve (4.25%-4.50% act. vs. 4.25%-4.505 exp.).

- The SNB will meet on June 19 (0.25% act. vs. 0.25% exp.), followed by the Norges Bank (4.50% act. vs. 4.50% exp.), the BoE (4.25% act. vs. 4.25% exp.) and the CBRT (46.00% act. vs. 44.00% exp.).

- The PboC meets on June 20 (3.00%-3.50% act vs. 3.00%-3.50% exp.)