Weekly Forex Market Recap: June 14 – 18 - Kakiforex.com - Financial Market Media No. 1 in the World Weekly Forex Market Recap: June 14 – 18 Weekly Forex Market Recap: June 14 – 18

June 19, 2021

Weekly Forex Market Recap: June 14 – 18

 The Federal Reserve’s latest monetary policy statement was the market mover of the week, resulting in a very positive run for the U.S. dollar and shifting global risk sentiment towards negative.

Notable News & Economic Updates:

  • Bitcoin jumps after Musk says Tesla will use when mining cleaner
  • WHO says Covid is spreading faster than the global distribution of vaccines
  • Oil up nearly 2% to multi-year highs on demand expectations
  • EU has carried out 300 million COVID-19 vaccinations – Von der Leyen
  • China May industrial output rises 8.8%, retail sales up 12.4%, both miss forecasts
  • FOMC Statement: Fed pulls interest rate hikes into 2023
  • Venezuela monthly inflation hits 28.5% in May, central bank says
  • World Bank rejects El Salvador request for help on bitcoin implementation
  • COVID-19 cases surge in Africa, less than 0.8% of fully vaccinated, say officials
  • Gold loses its shine as Fed hints at rate hikes
  • Brazil central bank hikes rates, eyes quicker return to ‘neutral’ policy
  • China May new home prices up 0.6% m/m vs 0.6% in April
  • China’s Digital Yuan is now available at 3000+ ATMs in Beijing
  • Bitcoin miners in Sichuan ordered to shut down
  • Dow falls more than 500 points to close out its worst week since October

Rate Hikes Coming Sooner?

Price action at the beginning of the week was relatively calm, with exception to the crypto markets, once again reacting to Elon Musk’s weekend tweets.  As for the rest of the markets, it’s likely on traders sitting on the sidelines as they awaited the potential fireworks from the Federal Reserve monetary policy statement on Wednesday. And boy were traders not disappointed as the Fed surprised market players with a stronger-than-expected inflation outlook, and hints that interest rate hikes may happen sooner than expected (now possibly two hikes in 2023).

This lit the fire under the U.S. dollar, which seems to have taken down gold, oil and crypto at the same time. And it looks like prospects of higher interest rates have drawn in risk-off behavior as global equities fall and longer-term bonds caught a bid.  This is also likely why we saw a strong move higher in the Japanese yen, possibly catching a “safe haven” bid as Asian equities moved broadly lower into Friday.

In the FX market, all of the majors were down against the Greenback, and as mentioned above, the Japanese yen had a really strong run higher to end the week at second place.  That performance was likely with the help of net positive economic updates from Japan and the near certainty that the Olympic games will be held this Summer.

The Aussie and Kiwi both saw a bounce on Thursday after positive Aussie jobs data and New Zealand GDP data, raising speculation that we may see rate hikes from the RBA and RBNZ sooner than expected. But that was a short-lived move as both negative risk sentiment and a strong U.S. dollar push both currencies to their closing week status as the biggest losers.

USD Pairs

  • U.S. inflation expectations rise to new highs in NY Fed survey
  • Lumber prices sink below $1,000 for the first time since March, now down 40% since May’s record high
  • U.S. Producer prices climb 6.6% in May on annual basis, largest 12-month increase on record
  • Senators face roadblocks to passing bipartisan infrastructure plan as opposition mounts
  • U.S. retail sales take step back as spending pivots to services, trend remains strong
  • U.S. homebuilder confidence falls to 10-month low in June
  • U.S. mortgage applications rise as purchases rebound
  • Fed makes technical adjustments to keep benchmark rate within target range
  • Fed holds rates steady but raises inflation expectations sharply
  • U.S. housing starts rise less than expected in May; building permits fall
  • Jobless claims show surprise increase to highest level in a month
  • Philly Fed factory activity edges lower in June
  • Fed’s Jim Bullard sees first interest rate hike coming as soon as 2022
  • Fed’s Kashkari opposed to rate hikes at least through 2023

GBP Pairs

  • Freedom Day’ for England pushed back 4 weeks to July 19
  • U.K. claimant count fell by 92.6K vs. projected 25K increase
  • U.K. average earnings index up 5.6% vs. 4.9% forecast
  • UK inflation unexpectedly surges to 2.1% in May as Brits splurge after lockdown – and economists think prices have further to rise
  • UK retail sales dip as consumers, freed from lockdown, dine out

EUR Pairs

  • ECB sees early tensions emerge over ending crisis stimulus
  • Euro zone at a turning point but too early to debate end of ECB help: Lagarde
  • German final CPI unchanged at 0.5%
  • ECB’s Villeroy rebuffs French adviser’s helicopter cash proposal
  • In May 2021, annual inflation up to 2.0% in the euro area; Up to 2.3% in the EU
  • German Producer prices in May 2021: +7.2% y/y

CHF Pairs

  • Swiss National Bank chief says policy will remain expansionary despite inflation upgrade
  • Swiss trade surplus recorded a record CHF 4.3B in May

CAD Pairs

  • Average Canadian house price up 38% compared to last year, but down from March
  • Canada May inflation accelerates at fastest pace in a decade
  • Wholesale sales rise 0.4 per cent in April, Statistics Canada reports
  • Bank of Canada seeing signs of cooling in hot housing market
  • ADP Canada National Employment Report: Employment in Canada Increased by 101,600 Jobs in May 2021

NZD Pairs

  • NZIER Consensus Forecasts show weaker starting point for growth is not expected to persist
  • New Zealand food prices rose 0.4% in May 2021. After seasonal adjustment, they were up 0.4%.
  • New Zealand current account deficit widens to $5.0 billion
  • New Zealand economy expanded by 1.6% in Q1 2021 vs. 0.5% forecast
  • ANZ forecasts RBNZ rate hike in February 2022

AUD Pairs

  • RBA minutes: Premature to end bond-buying program
  • Australia’s inflation expectations rise in June
  • Australia added 115.2K jobs in May vs. 30.5K consensus
  • Australian jobless rate down from 5.5% to 5.1% in May
  • Australia’s central bank seen hiking rates in Q1, 2023 – Westpac economists

JPY Pairs

  • Industrial production in Japan rises 2.9% in April
  • Japanese tertiary industry activity index down 0.7% as expected
  • Japan April core machinery orders rise 0.6% month/month
  • Japan exports jump most in 41 years, machine orders rise
  • Japan to ease state of emergency, focus on Games spectators
  • Japan inflation gains for the first time since March 2020
  • BOJ to launch new scheme for fighting climate change, keeps policy steady
  • BOJ tankan to show manufacturers’ Q2 mood improved