FOMC meeting the highlight of a respectively calm week

FOMC meeting the highlight of a respectively calm week

Risk sentiments continued improving over the past week driving risk assets higher, and weighing on safe havens including the US dollar which ended the week lower for the third consecutive time. The greenback could only post some gains against the other safe-havens, mainly the yen and Swiss Franc. Investors appeared to shrug off recent concerning developments in the United States (protests raging across the country) and ignore the potential risks from a second virus wave and worsening Sino-US relations, and instead focus on the increasing signs that a recovery from the pandemic is well under way. Economic data offered some support to this narrative, mainly the US jobs report published on Friday that showed the jobless rate fell to 13.3% last month from 14.7% in April, and the ISM surveys and vehicle sales, also showed signs of improvement.

The Euro recorded its third straight weekly rise, pushed by improving risk appetite and backed also by the ECB’s decision to boost its pandemic emergency purchase program (PEPP) by €600 billion on Thursday. The British pound also enjoyed positive momentum and surpassed the 1.27 barrier, although the last round of Brexit talks between UK and EU negotiators was concluded without any notable progress.

This week politics are expected to continue to drive the Euro and British pound, traders will continue looking for any Brexit updates with the end of June deadline for extending the UK’s transition period fast approaching. The EU finance ministers are expected to hold a meeting on Thursday to discuss a virus rescue fund. And if EU leaders fail to approve in the coming weeks a €750 billion fiscal package proposal that the markets have put their hopes on, the Euro rally will most probably lost steam.

The Federal Open Market Committee (FOMC) will meet on Wednesday. However policy makers are not expected to take any new policy actions. Besides, there is some economic data due which may affect the markets. Below is some of the more important data expected this week:

Tuesday, June 9, 2020:

• US JOLTs Job Openings (Apr) (14:00 GMT)

Wednesday, June 10, 2020:

• US Core CPI (MoM) (May) (12:30 GMT)
• Crude Oil Inventories (14:30 GMT)
• FOMC Economic Projections (18:00 GMT)
• FOMC Statement (18:00 GMT)
• Fed Interest Rate Decision (18:00 GMT)
• FOMC Press Conference (18:30 GMT)

Thursday, June 11, 2020:

• US Initial Jobless Claims (12:30 GMT)
• US PPI (MoM) (May) (12:30 GMT)

Friday, June 12, 2020:

• UK GDP (YoY) (06:00 GMT)
• UK GDP (MoM) (06:00 GMT)
• UK Manufacturing Production (MoM) (Apr) (06:00 GMT)
• UK Monthly GDP 3M/3M Change (06:00 GMT)