The interest rate hike from the Fed, the main fundamental event we focused on yesterday had as a result the appreciation of the US Dollar against the majority of its counterparts. But the British Pound was the only currency which managed to appreciate against the US Dollar, and it is noteworthy that this trend happened with some disappointing UK Retail Sales readings.
The Unemployment Rate for Australia for the month of May was better than expected, with a reading of 5.5% versus the forecast of 5.7%, while the figure for Employment Change was significantly stronger than expected at 42.0K versus the forecast of 10.0K. While this surge in new employment reading and the decrease of unemployment are both very positive for the Australian economy reflecting the growth and health of the labor market, the Australian Dollar did not manage to appreciate against the US Dollar. AUD/USD trended lower from 0.7632 to 0.7569.
No surprise from Swiss National Bank leaving its key interest rate unchanged at -0.75%. Gold prices were under selling pressure almost -1.50% at $1256 per ounce, so it is no surprise that Swiss France depreciated against the US Dollar and USD/CHF trended higher from 0.9704 to 0.9770 or +0.43%.
Again the Bank of England did not surprise the forex market and kept its key interest rate unchanged to 0.25%. The Retail Sales for the month of May were less than expected, with a reading of -1.6% versus the estimate of -1.0% on a monthly basis. But on yearly basis the reading of Retail Sales also missed by far the estimate of 1.9% as the actual reading was 0.6%. Is there an evident weak consumer demand, which could lead to lower economic growth in the near future?
It is too early to reach this conclusion but higher inflationary readings as shown by a higher than expected Consumer Price Index on Tuesday 13th June 2017, could certainly weigh on the decision of the Bank of England to raise interest rates in the future. The British Pound despite the weak Retail Sales readings appreciated against the US Dollar and GBP/USD trended higher from 1.2691 to 1.2795.
The strong gains of the Pound were primarily the result of the interest rate decision, as some members of the monetary policy committee meeting voted in favor of an interest rate hike, a scenario now possible in the near future.
Some mixed economic readings for the US economy with lower than expected Initial Jobless Claims, being positive for the US Dollar, but lower than expected Industrial Production, showing zero economic expansion for the month of May, did not prevent the US Dollar from appreciating against the Euro, the Canadian Dollar, and the Japanese Yen.
Economic calendar key data for Friday 16th June 2017
The main economic data are the interest rate decision from the Bank of Japan, Euro-Zone Consumer Price Index, US Housing Starts and University of Michigan Confidence Survey.
Volatility is likely expected for USD/JPY, EUR/USD and even GBP/USD as poor UK Retails Sales have very important significance reflecting weaker economic growth.