FX Fundamentals in Focus

Posted On 17 May 2015
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The lack of any really juicy bits of economic data did not mean that last week’s markets were boring. Far from it.
The week was characterized by USD weakness. All market participants are convinced the USD is in a unending bull market. None seem to realize that the $ Index has been unable, despite repeated attempts to surpass its all time high achieved in March of 2003 it has failed to do so. A series of lower highs and lower lows is in the making.
Other notable events saw gold break above the 1220 level and hold and risk as measured by the SP500 attempt new highs.
This week is full of Central bank commentary in Europe and PMI numbers.
USD$ starts the week on Tuesday with Building Permits which is a good leading indicator. It is expected at 1.07Mn.
On Wednesday we have the important FOMC Meeting Minutes.
On Thursday we have the customary Unemployment Claims figure estimated at 267,000 and the Philly Fed Manufacturing Index thought to be 8.3.
On Friday we have both CPI and Core CPI, the former forecasted at 0.1% and the latter at 0.2%.

EURO: On Tuesday we have German Economic Sentiment at 50.1.

On Thursday we have both the French and German Manufacturing PMI numbers. The former is though to be 48.6 and the latter at 51.9. Also on Thursday ECB President Draghi speaks which he also does on Friday.
On Friday we also have the German IFO Business Climate number expected at 108.3. This is a composite index based on surveyed manufacturers, builders, wholesalers, and retailers, a good cross section of the economy.
GBP: A good variety of data culminating in the BOE’s Governor’s speech at the end of the week.
On Tuesday we have CPI thought to be flat at 0.0%.
On Wednesday we have the MPC Bank Rate votes though to be 0-0-9 meaning that zero members vote for a hike or decrease and all 9 vote to keep rates unchanged.
On Thursday we have Retail Sales at 0.3%.
BOE Governor speaks on Friday.
YEN: n Sunday night we have the release of Core Machinery Orders expected at 1.6%.
On Tuesday we have Preliminary GDP which is expected to be 0.4%.
On Thursday we the important Monetary Policy Statement.
Friday witnesses the BOJ Press Conference and BOJ Governor Kuroda speaks.
AUD: Only one item which takes place on Monday when we have the Monetary Policy Meeting Minutes.
CNY: Only one item which takes place on Wednesday when we have the HSBC Flash Manufacturing PMI number expected at 49.5.
OUR VIEW: It will be a busy and volatile week. main question will be whether risk can continue its upward trajectory in light of a falling $ assuming it does continue to correct.
If that is the case, how will commodities fare?
Stay nimble. Good luck trading.

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