Week Ahead in FX (June 20 – 24): Focus on Inflation, Flash PMIs & Central Bankers’ Speeches

It’s bound to be another busy week for the majors, as a handful of central bank heads will be giving speeches.

Oh, and don’t forget that CPI, flash PMIs, and retail sales figures are due!

But before that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!

And now for the closely-watched potential market movers this week:

Major Economic Events:

Canadian retail sales (June 21, 12:30 pm GMT) – After three consecutive months of strong consumer spending data, a bit of a slowdown might be seen for Canada’s April headline retail sales.

The figure is slated to come in at 0.5%, a far cry from the earlier 2.4% gain, while the core version could accelerate from a flat figure to a 0.8% increase.

UK CPI (June 22, 6:00 am GMT) – Another uptick in price pressures is eyed for May, likely taking the headline figure up a notch from 9.0% to 9.1%.

A higher than expected CPI would suggest that the BOE is doing too little too late to keep inflation in check, possibly warranting a larger rate hike in their next meeting.

Flash PMI readings (June 23) – It’s the third week of the month, so it’s time for another round of flash PMIs!

First up, we’ve got the top of the euro region printing their June numbers. Another dip in business activity is expected for the manufacturing and services sectors of Germany and France, but the readings are still slated to reflect growth.

Next, the UK manufacturing PMI is projected to fall from 54.6 to 53.8 while the services PMI could dip from 53.4 to 53.0. This would also reflect a slower pace of expansion in the industries.

Lastly, the US manufacturing PMI might also post a decline from 57.0 to 56.2, but the services sector could show an improvement from 53.4 to 53.9.

Central bank officials’ speeches – We’ve got no less than Fed head Powell and ECB Chairperson Lagarde giving testimonies this week!

Lagarde has a couple of speeches early on (June 20, 1:00 pm and 3:00 pm GMT). She is due to testify before the Committee on Economic and Monetary Affairs of the European Parliament and would likely be asked to share more deets on the ECB’s plans to cap bond spreads.

Next up we’ve got Fed official Bullard talking about inflation and interest rates at an event (June 20, 4:45 pm GMT) hosted by the Barcelona School of Economics.

On Tuesday (June 21, 12:00 am GMT) RBA Governor Lowe will be giving a speech on the economic outlook and monetary policy at an event in Sydney. Audience questions are expected, so he might be asked about the central bank’s future policy plans.

Fed Chairman Powell is scheduled to testify on the Semi-Annual Monetary Policy Report before the Senate Banking Committee on Wednesday (June 22, 1:00 pm GMT) and might drop hints on whether or not another 0.75% hike is in the works.

Powell has another speech lined up in front of the House Financial Services Committee the following day. Better pay attention to the Q&A portion after his prepared speech!

Forex Setup of the Week: USD/CHF

USD/CHF 4-hour Forex Chart

This pair just can’t seem to break past parity!

USD/CHF made a couple of attempts to bust though the 1.0000 major psychological handle but tumbled back down towards the double top neckline at .9800.

A break below this support area could set off a longer-term slide, possibly dragging price down by the same height as the reversal pattern or 200 pips.

I’m seeing a bearish moving average crossover that says the odds are in favor of sellers, so the neckline is more likely to break than to hold. However, Stochastic is already indicating oversold conditions, so turning higher might mean that buyers are returning.

Stay on the lookout for Powell’s remarks if you’re planning on trading this one!

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