Prepare for the World Economy’s Most Important Week of the Year

Hong Kong

This week could be the most important week of the year for the global economy according to Bank of America, as President Trump meets Kim Jong-un, MP’s vote on the Brexit bill along with the Fed, ECB and BoJ all meeting.


Theresa May’s flagship Brexit legislation returns to the lower House of Commons after receiving a battering in the upper House of Lords, where it was amended 15 times. According to Bloomberg, ministers will be trying to overturn most of those defeats, with a combination of compromises and attempts to win rebel pro-EU lawmakers round.

GBP/USD looks to be consolidating around the $1.34 level having gained towards the start of last week on a service PMI beat. Brexit related uncertainty prompted a choppy end to the week for the pound after EU Brexit Minister Barnier rejected a key part of the UK’s backstop proposal for the Irish border by stating that the backstop cannot be applied to the whole of the UK. He did welcome the UK paper but said it raises more questions than it answers.

Sterling has weakened this morning after industrial production fell short of expectations, contracting for the second consecutive month.

Still to come this week, labour market data tomorrow, inflation on Wednesday and retail sales on Thursday.


The Dollar Index surrendered the 94-handle last week as investors became jittery around rising US trade tensions and the combative rhetoric being adopted by US President Trump.

The currency weakened further over the weekend after US President Trump refused to endorse the G7 statement. Investors are now looking ahead to Wednesday’s FOMC meeting where policymakers are widely expected to hike the funds rate by 25 basis points. Also, due this week, CPI data tomorrow, PPI on Wednesday, retail sales on Thursday and industrial production on Friday.


All eyes are on the European Central Bank this week with the Governing Council meeting on Thursday amid speculation they could announce an end date for the QE program. A sources story that suggested just that, sending EUR/USD above $1.18, helped also by a flurry of hawkish ECB comments.

Besides the ECB, industrial production figures are out on Wednesday while CPI follows on Friday.


Both USD/JPY and EUR/JPY advanced last week although both saw gains trimmed on Friday as safe-haven demand resurfaced on rising trade tensions.

Softer Japanese GDP data seemed to fly under the radar with USD/JPY touching a one week low on Friday. The pair has bounced slightly this morning approaching ¥110.

Still to come this week, PPI data tomorrow, industrial production Thursday and the BoJ policy decision on Friday.


EUR/CHF saw a modest gain last week, pushing it away from the YTD low set in the prior week. Safe-haven demand for the Swiss Franc appeared to dissipate somewhat while stronger-than-expected CPI data released on Wednesday only prompted a brief spell of downward pressure.

This week we look ahead to industrial orders and PPI data due on Wednesday.


The Australian Dollar advanced in the middle of last week with AUD/USD posting a new multi-week high at 0.7674 on stronger than expected Australian GDP data. Gains dissipated before the week was up however as trade figures were less encouraging and trade tensions began to resurface.

This week we look ahead to NAB confidence data due tomorrow, Westpac confidence data on Wednesday and employment figure on Thursday.


The Canadian Dollar has weakened over the weekend after US President Trump refused to endorse the G7 statement and elevated the war of words with Canadian PM Trudeau.

The Canadian Dollar was little changed for the week on Friday although did have a relatively choppy finish. A surprise drop in Canadian employment for May initially weighed but this proved short lived as wages grew at their strongest annual pace in nearly six years.

NAFTA related headlines will likely be the main focus this week with data releases on the light side – house price data is due tomorrow while manufacturing sales are on Friday.


The New Zealand Dollar rose last week with NZD/USD peeking above 0.7050 to trade at its best level since mid-April. Domestic impulses were limited however with gains attributed to a weaker US Dollar and lower US yields.

The rest of the week looks quiet with no tier-one data releases expected.


The Swedish Krona was relatively stable last week with EUR/SEK stuck in the 10.20-10.30 range.

Riksbank Deputy Governor Jochnick provided no surprises when he spoke on Thursday, commenting that they would like to see developments in underlying inflation before hiking rates and sees the next rate hike at the end of the year.

Inflation data is due this week with May CPI figures due on Thursday alongside the unemployment rate.


The Norwegian Krone has got off to a soft start this week with EUR/NOK moving above 9.5 after CPI fell short of expectations.

Still to come this week, the Norges Bank regional network survey tomorrow and trade data on Friday.


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