The Week Ahead – The Fed, the UK Economy, and the BoE Are in Focus

For the Dollar:

It is a quieter week ahead on the US economic calendar.

Investors must wait until Thursday for jobless claims that will move the dial. A fall in jobless claims would support a July Fed interest rate hike. However, we expect prelim private sector PMIs for June to have more impact on Friday. The services PMI will have more influence, with softer numbers favoring a Fed pause.

While the stats will move the dial, Fed chatter will likely garner more interest. FOMC members Bullard, Williams, Mester, Bowman, and Bostic are on the calendar to speak. However, Fed Chair Powell will have more impact. The Fed chair will give testimony on Capitol Hill on Tuesday and Wednesday.

We expect market sensitivity to Powell’s economic outlook and monetary policy comments.

For the EUR:

It’s also a quieter week for the EUR.

On Tuesday, German wholesale inflation figures will draw interest. With inflation the ECB focal point, softer wholesale inflation numbers would question the ECB’s upward revision to inflation for 2023.

However, prelim private sector PMIs for France, Germany, and the Eurozone will have more impact. The Eurozone economy has formed cracks. A deeper contraction in the manufacturing sector and slower growth across the services sector would weigh.

Beyond the stats, investors should also consider ECB commentary. ECB Chief Economist Philip Lane (Mon), and Executive Board members Luis de Guindos (Mon, Tues, Thurs), Fabio Panetta (Thurs, Fri), Andrea Enria (Tues), Isabel Schnabel (Mon, Wed, Sat), and Elizabeth McCaul (Tues) are on the calendar to speak.

For the Pound:

It is a busy week ahead for the Pound. The UK CPI report will move the dial on Wednesday. With the BoE delivering the June interest rate decision on Thursday, the Pound will respond to sticky inflation.

The Bank of England will deliver its pre-summer interest rate decision on Thursday. A hawkish 25-basis point interest rate hike would align with recent economic indicators, suggesting the need for more aggressive policy moves to tame inflation.

Retail sales figures and prelim private sector PMI numbers wrap up a busy week on Friday. We expect the retail sales and services PMI to have more impact. Strong retail sales and a pickup in service sector activity would support further BoE policy moves.

For the Loonie:

It is a quiet week ahead on the economic calendar for the Loonie.

Retail sales will draw interest on Wednesday. After a marked decline in March, a pickup in retail sales would raise the bets on another BoC rate hike.

Other stats include RMPI, manufacturing sales, and wholesale sales numbers. However, we don’t expect the stats to influence.