The new trading week in the forex market for 25-29 June 2018 is staring today with a relative thin economic calendar and the trade wars climate being evident and able to define short-term trends for major currencies such as the US Dollar. The focus today is on the release of the IFO readings for the German economy and the US New Home Sales with not any major economic events during the Pacific and the Asian Session. Low to moderate volatility should be expected today in the forex market.
This week in the forex market there will be important releases for the US economy, the final GDP growth personal income, new and pending home sales, durable goods order and the CB consumer confidence. Other important economic data expected for the UK economy is the final GDP growth estimates, for the Euro Area the flash inflation and the Germany Ifo business climate, and for Japan the industrial production, unemployment and retail sales.
These are the key economic events in the forex market today to focus on:
European Session
- Switzerland: Current Account, Germany: Ifo Current Conditions, Ifo Expectations, Ifo Business Climate, Spain: Balance of Trade
Time: 07:00 GMT, 08:00 GMT
The Current Account for Switzerland will be released early in the European Session, being one of the two components of the balance of payments, the other being the capital account.The current account consists of the balance of trade, net primary income and net cash transfers, that have taken place over a given period of time. The current account an important indicator of an economy’s health, with a trade surplus considered positive and supportive for the local currency, i.e. the Swiss Franc, reflecting capital inflows in the country and increased demand for goods and services denominated in Swiss Francs, which in theory should to the appreciation of Swiss Franc versus other currencies. Latest figure for the Swiss Current Account was a surplus of 19.7B Swiss Francs.
The IFO figures for the economy of Germany may move the Euro, reflecting the current conditions and business expectations for the next six months. Higher than expected figures are considered positive for the German economy and the Euro.
As seen from the below chart “The Ifo Business Climate Index for Germany was flat at 102.2 in May of 2018, the same as an upwardly revised 102.2 in April but missing market expectations of 102.7. Still, the declining trend stopped following five consecutive months of drops in the index. The index of current conditions rose to 106 from 105.8, in line with forecasts.”, Source: Trading Economics.
So far in 2018 the German Ifo Business Climate is weak compared to the readings in 2017. The forecast is for lower readings for all three German Ifo readings, which may influence negatively the Euro. The Ifo Current Conditions, Ifo Business Climate and Ifo Expectations reading are expected to decline at 105.6, 101.7 and 98.0 accordingly, lower than the previous figures of 106, 102.2 and 98.5 respectively.
A trade surplus for the economy of Spain is considered positive for the Euro, although the latest reading was a trade deficit of -0.83B Euros.
American Session
- US: Chicago Fed National Activity Index, New Home Sales, New Home Sales MoM, Dallas Fed Manufacturing Index
Time: 12:30 GMT, 14:00 GMT, 14:30 GMT
The Chicago Fed National Activity Index (CFNAI), is a monthly index measuring overall economic activity and in addition any inflationary pressures in the economy, and the Dallas Fed Manufacturing Index provides important information about the state of manufacturing activity and increases or decreases on indicators such as output, employment, orders, and prices.
Higher than expected readings for both the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index are considered positive for the US Dollar. Both Indexes however are expected to decline.
A higher than expected figure for the US New Home Sales should be considered positive for the US Dollar, indicating a robust housing market which has a high correlation with the overall state of the economy, and contributing positively on economic growth based on consumers spending.
As seen from the below chart New Home Sales in US are in general trending up in 2018, and the forecast is for an increase and a reading of 0.667M, higher than the previous reading of 0.662M, or a monthly growth of +1.5%, higher than the previous decline of -1.5%.
Overall some mixed economic data is expected for the US economy, adding volatility for the US Dollar.
