Last Friday, the moonie has also disappointed traders, showing 1.1K decline in employment rate in April, although expected drop was from 32.3K to 17.4K. It is also worth noting that unemployment in Canada is at a record low within the last ten years, and wages are rising for the third month in a row. So the conclusion can be made that the working population with growing salaries is more than enough to speed up the inflation. On Friday this data is going to be published, besides there will be data on the volumes of retail sales and the base index of retail sales in March. Also in the week will be data on the amount of investment in Canadian securities. The rise in inflation could spur the Bank of Canada to revise the interest rate upwards. Therefore, this factor can help the Canadian dollar to recover losses, and oil price, that is growing for the second week also support the Canadian.
GBP / USD
Weak macro statistic data in the US has helped the British pound to stop the downward rally in the pair. Consolidation was formed in the corridor 1.36-1.35, it is technically time for the correction of the three-week strengthening of the US dollar against the main basket of currencies. The decline in economic indicators in Britain was important factor. The current picture shows that all the negative factors were already taken into account in the price and now it is to to decide the direction of the further movement.
Tuesday will be the key day for the British pound. Claimant Count Change, Average earnings Index + Bonus, employment change. After the release of the unemployment data, which, by the way, is at the lowest level for more than ten years, the Inflation Report Hearings will be held. An extremely important day, naturally the data better than forecasted can push currency for a stronger correction. Slowing down of the US inflation will not stop the pound from consolidation. On the contrary, the continuation of the "bad news" tendencies will feed the bears, who can continue the downward rally.
The tension around Iran has helped oil to rise to almost $ 72.00 per barrel. The bullish rally has stopped for a correction at the end of last week, but today it continued. It is unlikely that this week Iranian issue will be fully solved and everything will become clear. What kind of oil restrictions on the Middle East will be imposed (preliminary forecasts in a very large range from 200 to 700 million barrels a day)? What other economic sectors will be affected?
This week, Iranian Foreign Minister Javad Zarif will discuss the nuclear agreement with his EU counterparts, after a conversation with Russia. However, the United States fuels tension (US flag was burned last week in Iran's parliament), opening an embassy in Jerusalem.
It should be noted that the USA are satisfied with the current price, they’ve increased the production, which, by the end of the year, can catch up with Russia. (They produce 10.7 million barrels a day, when Russia averages 11 million). Naturally, the change in oil inventories in the US, that will be released on Wednesday, will influence the market. Though geopolitics is the main driver.
EUR / USD
US inflation last week, has stopped the three-week bear rally in pair, forming a correction, with the goal at 1.20. Though inflation remained above the Fed's target of 2%, but the slowdown of the economic indicator make investors doubt on the number of rate hikes this year. And the economic slowdown in the Eurozone, raises the question whether the QE program will be finished this year? This week, most likely is to clarify the situation.
Monday as usual is without volatile news. But they will start coming out on Tuesday. Germany's GDP for the first quarter, is expected to fall by 0.2% in the quarter and by 0.6% year on year. The same data will be released on the EU as a whole, it is expected to remain unchanged, but if the indicator shows the drop, then the euro will be sold off. Also on tuesday the Eurogroup will meet. The US will publish a base retail sales index, retail sales in April.
On Wednesday, the Eurozone will publish inflation data, and after that Mario Draghi will speak on the economic mood of the ECB. In the US, the construction sector reports the number of building permits issued in April, the number of new houses construction. Also, the US will release the volume of industrial production in April, by the end of the day, America traditionally releases data on crude oil and gasoline inventories.
On Thursday, Initial Jobless Claims in the United States will be published. The index of industrial activity and the manufacturing index from the Federal Reserve Bank of Philadelphia for May. On Friday - inflation in Germany from PPI and the number of drilling rigs from Baker Hughes. The whole week is accompanied by speeches by representatives of both the ECB and the Fed.