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gt.io
Date:
8th Jun 2020
Author:
gt.io

Economic Calendar: Top 5 Events to Watch This Week 8-14 June

Global stocks rallied last week as investors ignored the rising tensions between the United States and China. Instead, they focused on the recovery of the global economy as more countries start to reopen following lockdowns. All the key indices in Europe, Asia, and North America rose by more than 2%. 

Similarly, base metals like copper and nickel also did well mostly because of the better manufacturing and services PMI data from China, the US, and Europe. These numbers showed that demand was slowly rising. The price of crude oil continued to rally and is now trading at the highest level in three months as demand increases while producers are slashing production. On the other hand, gold and silver were under pressure as money rotated back to stocks. 

The US dollar declined sharply last week as its demand worsened. The dollar index declined by more than 2% while currencies like the Australian dollar, euro, and pound had their best weeks in months. But it pared back some of the losses on Friday when the Bureau of Labour Statistics released better-than-expected NFP data.
 
The Federal Open Market Committee will start its meeting tomorrow and conclude with its interest rate decision on Wednesday. With conditions in the US improving, we expect the Fed to make no major changes in its policy. It will leave interest rates unchanged and maintain the current pace of asset purchases. 

Still, market participants will read the statement for any clues about whether the bank is considering negative rates. The decision will be important for the US dollar, gold, stocks, and cryptocurrencies.
 
Inflation is an important thing for the market because it tends to influence the monetary policy. On Wednesday, we will receive the May Consumer Price Index (CPI) data from the United States. The key theme will be whether the country has indeed moved into deflation. Analysts expect the headline CPI to have declined by 0.1% after declining by 0.8% in the previous week. The also see it rising by 0.4% on a year-on-year basis. 

On Thursday, we will get the Producer Price Index (PPI) data, which are also key measures of inflation. Analysts polled by Bloomberg expect the PPI dropped by 0.2% in May. Other key inflation data to watch will be from Sweden, Japan, Norway, and China.
 
The Japanese yen has been on a downward trend simply because investors are moving from the so-called safe havens. The currency declined by more than 1.3% against the USD last week. This week, we will receive several important numbers from the country. Today, we received the final reading of the first-quarter GDP data. The numbers showed that the country moved into a recession in the first quarter. As such, the second quarter will be worse because the country was mostly in a state of emergency. 

On Tuesday, we will receive the overall wage numbers followed by PPI and machinery order data. Finally, we will get the second quarter sentiment from large manufacturers.
 
The Swiss franc rose by more than 50 basis points against the US dollar last week. This trend was mostly because of the overall weakness of the US dollar. The currency rose even after relatively weak data from the country. Data from the statistics office showed that the economy slumped by 2.6% in the first quarter, which was the worst contraction in more than a decade. On a positive note, the PMI rose from 40.7 to 42.1. This week, we will receive the unemployment data from the country.
 
Crude oil currencies like the Canadian dollar, Norwegian krone, and Mexican peso rose by more than 2% last week as the price of crude oil continued to rally. This week, these currencies will move depending on the progress that will be made by OPEC+ members. They will also move depending on the crude oil inventory data from the United States.
 
This week will be pivotal for global markets. If the rally in global stocks continue, it will increase the possibility that the major indices will move above their March highs in the coming month. Also, we will watch the trend in global currencies now that most of them are overbought against the USD.