June 14, 2021 | by sandeep
5 Market Movers to Look Out for This Week – 14/6/21
By Mateo Jarrin Cuvi
All eyes this week are on what the Fed will do (or say). There’s that and plenty other market movers for you to work with. Bonne chance!
Shopping Today Keeps Recession Away
With stimulus checks drying up, Retail Sales in the US slowed down a bit in April, remaining virtually unchanged from March’s level, which was revised to a growth of 10.7% following a preliminary reading of 9.7%.
Interestingly enough, this reading for April is 46% higher than that registered in April 2020 when the pandemic took hold of the country.
Despite this slowdown, with the US economy now buzzing and savings hitting record levels, experts believe shopping in the country will move up during the summer months.
As reported by CNBC, American “households have accumulated at least $2.3 trillion in excess savings during the pandemic, which should underpin spending this year.”
FXPRIMUS Head of Investment Research Kaia-Reet Parv believes May retail sales might have a positive showing.
“Despite durable goods sales already being quite extended beyond pre-pandemic levels, retail sales for May have the potential to surprise on the upside considering that 90% of the US is open and people have started to travel and go out more often, which could contribute to a further extension in the purchase of services,” Parv said.
Find out if the US is headed in that direction on Tuesday, June 15th at 12:30 pm GMT when the latest retail sales figures are released.
It’s time to shop for a USD trade or two!
Inflation. Times Two.
Another double just for you.
Latest CPI figures for the UK and Canada will be issued on Wednesday, June 16th, offering you a great chance to trade GBP and CAD.
What: UK CPI (YoY)
Day: Wednesday, June 16
Time: 9:00 am GMT
Note: On the back of higher gas and electricity bills, April’s UK CPI doubled to 1.5% after clocking in at 0.7% in March. The Bank of England expects inflation to touch 2.5% by the end of the year and drop back to 2% as late as 2023. Will pandemic-related base effects continue pushing UK inflation upwards in May?
What: Canada CPI (YoY)
Day: Wednesday, June 16
Time: 12:30 pm GMT
Note: Canada’s inflation grew in April by its fastest rate in more than a decade at 3.4% on a year-over-year basis. Prices are currently reacting to what was the largest price slowdown in almost 30 years seen in March and April of 2020 as the COVID-19 pandemic ramped up. The Bank of Canada expects inflation to near 3% before correcting itself to the preferred level of 2% during the latter half of the year as the impact of 2020’s price drops wanes.
In these times of COVID, CPI is all the rage, so pay close attention to these announcements and prepare a trade or two!
This One Will Be Worth Your Time!
June’s FOMC meeting will be a big one.
Rumors have it the Fed will start laying out a plan to dial back on some of the support being offered to the economy with a final decision to be reached in the late summer or early fall.
Fed officials have commented on this possibility in recent weeks.
For instance, Cleveland Fed President Loretta Mester said, “As the economy continues to improve, and we see it in the data, and we get closer to our goals … we’re going to have discussions about our stance of policy overall, including our asset purchase programs and including our interest rates.”
While the federal funds rates at their target range of 0 to 0.25% are expected to remain untouched for the foreseeable future, changes are bound to come for the Fed’s monthly purchases of Treasury securities ($80 billion) and mortgage-backed securities ($40 billion).
Certainly, last week’s CPI reading, which registered a 5% hike from May year-over-year and marked its highest jump since August 2008, might exert some pressure on the Fed to broach the need for tapering.
According to experts, actual tapering could happen as early as the end of 2021 or early 2022.
Tune in on Wednesday, June 16th at 6:00 pm GMT to carefully follow the statement issued by the Fed.
It’s bound to apply pressure on the USD and open up plenty of opportunities for you to trade!
Sales of Kiwis, Sauvignon Blanc & All Blacks Jerseys Seem to Be Taking Off
New Zealand recorded its worst ever GDP growth in 2020 at -2.9% as a result of the COVID-19 pandemic and the country’s drastic measures to curtail its spread.
Things, however, are looking up for the island nation.
Q2 2021 results look to be much better with a rise in the number of jobs being advertised, electronic card transactions and the country’s Performance of Services Index (PSI), which measures activities in the services industry.
Jarrod Kerr, Kiwibank’s chief economist, remains hopeful, stating that “vaccine rollouts and talks of a travel bubble with Australia — and hopefully more countries into next year — should support solid growth into 2022.”
Keep in mind that New Zealand, despite its draconian measures to fight COVID-19, performed at a much higher level than other industrialized nations such as the US and Japan whose economies shrank by 3.5 and 4.8%, respectively.
Let’s see if this holds true on Wednesday, June 16th at 10:45 pm GMT when New Zealand releases its latest GDP data.
All that Glitters is Gold
Gold has seen plenty of gains during recent months with its price moving from a low of $1684 per ounce in March 2021 to just shy of $1900 one week ago.
Bitcoin’s sudden crash and inflationary expectations rising across the globe seem to have boosted confidence in one of the world’s favorite safe havens.
Will this trend continue or is the price of gold bound to come back down?
Last week’s US CPI reading seemed to have benefited the price of gold with its spot rising by 0.3% to $1,893.75 per ounce.
According to Jason Teed, who serves as co-portfolio manager of the Gold Bullion Strategy Fund, “Should inflation continue beyond what’s expected, gold may continue to increase in price, but if we see inflation begin to ameliorate, the metal may let go of some of the gains we’ve seen so far this year.”
So keep your eyes peeled for any gold-related news, including the many CPI announcements (see above) to be issued this week.
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*Any opinions, news, research, analyses, prices or other information contained here are provided as general market commentary and do not constitute investment advice. FXPRIMUS does not accept liability for any loss or damage, including without limitation to, any loss of proﬁt, which may arise directly or indirectly from the use of or reliance on such information.