Central banks and US inflation headline the economic docket this week
Rates and Inflation
During the upcoming week traders and investors look to key interest rate decisions from the European Central Bank and Bank of Canada, and Consumer Price Index inflation data from the United States. The US CPI inflation release could be a major market mover, following last months red hot 0.9 percent increase in US CPI excluding food and energy prices.
Traders also look to Gross Domestic Product data from Japan and the eurozone, with most economists predicting negative quarterly and annual growth figures for both the Japanese and the eurozone economy.
Market participants also look to a key G7 meeting in the United Kingdom, and Weekly jobs and Sentiment data from the United States economy.
Monday 7th June, Japanese Gross Domestic Product
Japanese Gross Domestic Product is released by the Cabinet Office and shows the monetary value of all the goods, services and structures produced in Japan within a given period of time. GDP is a gross measure of market activity because it indicates the pace at which the Japanese economy is growing or decreasing. Due to the negative effects of COVID-19 economists are predicting that the Japanese economic growth contracted during the last fiscal quarter.
- The EURJPY pair is only bearish while trading below the 133.00 level, key support is found at the 131.90 and 130.00 levels.
- If the EURJPY pair trades above the 133.00 level, buyers may test towards the 133.90 and 134.80 resistance levels.
Tuesday June 8th, Eurozone Gross Domestic Product
Eurozone Gross Domestic Product is released by Eurostat and is a measure of the total value of all goods and services produced by the Eurozone. GDP is considered as a broad measure of the Eurozone economic activity and health. Economists are predicting that the eurozone economy contracted during the first fiscal quarter due to the fact that most of Europe was impacted by COVID-19 lockdowns during the majority of that period.
- The EURUSD pair is only bearish while trading below the 1.2130 level, key support is found at the 1.2080 and 1.1990 levels.
- If the EURUSD pair moves above the 1.2130 level, buyers may test towards the 1.2240 and 1.2344 levels.
Wednesday 9th June, Bank of Canada Rate Decision
The Bank of Canada Interest Rate Decision is announced by the Bank of Canada, and is closely followed by the central banks latest monetary policy statement. If the Bank of Canada is hawkish about the inflationary outlook of the economy, and rises the interest rates it is positive for the Canadian dollar currency. If the central bank has a dovish view on the Canadian economy and keeps the ongoing interest rate it is seen as negative for the Canadian dollar.
- The USDCAD pair is only bearish while trading above the 1.2150 level, further losses towards the 1.1990 and 1.1880 levels remain likely.
- If the USDCAD pair trades above the 1.2150 level, buyers may test towards the 1.2220 and 1.2300 resistance levels.
Thursday 10th June, ECB Interest Rate Decision
The European Central Bank's interest rate decision is made by the ECB Governing Council on whether to either increase, decrease or maintain interest rates. The key mechanism behind the monetary policy of the ECE is the control of interest rates. After the ECB Interest Rate Decision is announced, the European Central Bank holds a lengthy monthly press conference with ECB President Christine Lagarde, who delivers a prepared statement, and also takes questions from journalists and reporters.
- The EURGBP pair is bullish while trading above the 0.8680 level, key resistance is found at the 0.8740 and 0.8780 levels.
- If the EURGBP pair moves below the 0.8680 level, sellers may test towards the 0.8480 and 0.8360 levels.
Friday June 11th, US Consumer Sentiment
The Michigan Consumer Sentiment Index is released by the University of Michigan and is a survey of personal consumer confidence in economic activity. The index shows a picture of whether or not consumers are willing to spend money. Generally speaking, a high reading anticipates positive for the US dollar currency, while a low reading is seen as negative for the US dollar currency.
- The GBPUSD pair is only bearish while trading below the 1.4200 level, key support is found at the 1.4120 and 1.4000 levels.
- If the GBPUSD pair trades above the 1.4200 level, buyers will likely test towards the 1.4250 and 1.4300 resistance levels.