Weekly Market Preview –  June 12 to 18 

The Week Ahead.
A tumultuous political week on both sides of the North Atlantic has set the scene for another interesting week ahead for global markets. The British election result (non-result) for the ruling Conservative party has sent the GBP scurrying. On the other side of the pond a third interest rate rise in six months is largely anticipated.
Despite uncertain global times, this interest rate move is largely expected as the Federal Reserve mandate regarding employment appears to be achieved whilst inflation is expected to reach the target 2% in coming months. Whilst this June meeting move has been widely anticipated almost to the point of it likely to occur no matter what recent data suggests it is likely that future moves will not be so actively expected in the next few months. Further muddying the Fed’s waters is the filling of three vacancies on the Fed’s board by the President. US data is highly concentrated mid-week bookending the FOMC Rate decision in the early hours of Thursday morning (AU and NZ time).
The AUD has opened the short week following Monday’s bank holiday at 0.7541 against the USD  and 0.5956 against the GBP. It has also started the week against the NZD below 1.0500 with talk of trans-Tasman currency parity again taking up space in many publications although we feel that this is not likely to occur in this cycle. Australian data this week is dominated by Thursday’s employment report that often resembles Forrest Gump’s box of chocolates. Consumer sentiment, business confidence and inflation expectations indices are also due for release.
New Zealand data this week is centred around current account and GDP reports. The market is anticipating GDP gowth in the first quarter of 0.7% in a result that would see annualised growth sitting around 2.7%. The NZD has opened the week firmly against the AUD as noted above whilst also pushing near a three-month high against the GBP following the British election’s uncertain outcome.
Normally the the prospect of a looming Bank of England policy meeting would be the big story in town in the UK however the fallout from last week’s election has this tinme overshadowed the event. This uncertainty is likely to linger this week with the prospect of a delay to the start of the parliamentary year with the Queen’s Speech on the cards. Inflation and unemployment data are also due for release this week in the UK as well as retail sales figures. The declining GBP will also likely continue to heap pressure on British households that have been struggling with diminished purchasing power in recent times as wage growth has failed to keep up with inflation.
Data from the eurozone this week includes a range of price measures as well as emploment, industrial production and trade balance. Eurogroup meetings round out the week. The commencement of Brexit discussions next week will also likely remain topical with the UK election outcome throwing in some additional uncertainty and spice to an already fraught situation.
In Asia this week Chinese data on Wednesday includes retail sales and industrial production whilst Japan’s central bank meeting on Friday will be it’s focal point of the week.
Regards All.
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