The upcoming week will truly be a marathon for the ECB and the Fed. Last week regulators have showed a direction, the Fed has raised the rate, and the ECB will continue to stimulate the economy till the end of the year.
The week has started with a small gap down. A trade war with China is playing against US dollar. It has already prepared counter tariffs, coming into force on July 6. In his turn american president announced that the list of duties will be increased to the target of $ 100 billion (currently $ 50 billion). How far Donald Trump will go and how long these trade frictions will continue? This is probably the main question of the upcoming week. Since only these trade disagreement between the US and the PRC prevent the American currency from growing higher.
GBP / USD
It is worth paying attention to the British pound. On Wednesday, only the industrial trend orders for June will be published, but Thursday will be full of news. At 11:00 GMT, the Bank of England will announce its decision on the interest rate, publish a report on monetary policy and the minutes of the meeting of the Bank of England. No changes are expected, Britain is now is not in the state to tighten monetary policy.
High inflation in the UK can push the regulator to raise the interest rate further. These are exactly those signal that British bulls are waiting for. Despite the risks associated with the Brexit, a deficit in the current balance of payments and with the expectation of the economy slowdown after leaving the EU.
On Thursday starting from 11:00 GMT, it is worth paying attention to the British pound, the publications of the Bank of England representatives will provide trading opportunities within a day. And later in the evening at 20:15 GMT, the head of the Bank of England, Mark Carney, can also raise market volatility.
USD / CAD
Interesting releases this week on the loonie also to be published on this week. On Thursday, a report on the volume of wholesale sales will be released, and on Friday, monthly and annual inflation data will be released. Report on the retail sales, which is usually treated as an indicator of consumer confidence, because it reflects the state of the retail sector in the short term.
Target inflation range for the Bank of Canada is 1-3%, its growth can push the regulator to tighten monetary policy, but in the context of trade tension with the US (tariffs on Canadian steel and aluminum), it is too early to talk about this. As the deceleration of all key indicators is expected, it is worth considering Canadian dollar vs. strong US dollar, where the weak indicators from Canada will give the best opportunity to earn. But in case the release will be place better than the forecasts, then it is better to consider the loonie vs. weak euro for now.
This week the key data we should expect on Friday, then the meeting of the OPEC members will take place. This meeting was already called "the most political one".
Informal leaders of the alliance, Russia and Saudi Arabia, are already ready for a gradual restoration of production volumes due to the supply reduction risks. Main supply interruptions are from Venezuela, that barely copes with half of the required volume on the sold contracts. Soon, US sanctions against Iran will come into force again, and it is to limit the Middle East country in the extraction and sale of black gold.
Iran has already appealed to Saudi Arabia, with a request not to increase production volumes. And last Friday Iran, Iraq together with Venezuela reported that they are to block the offer to increase production. It is also very likely that small OPEC members can support the proposal to leave output level unchanged. As none of them can increase the volume properly. This is possible only for large exporters. The meeting is going to be very tense.