Your Weekly Fundamental View (5-9 June)

Juin 05, 2017 12:00

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Need to Know

The focus of the trading week is on the general parliamentary elections in the UK and the interest rate decisions in Australia, India, and the EU. The UK elections are being watched closely by the market as the polls indicate a closer race than expected between the current Conservative government and its competitors, mainly, the Labour Party. Check out the special election page for key graphs, stats, and more.

Coming Up

Bank Holiday Takes Place on Monday, 5 June

France, Germany, and Switzerland have official public holidays on Monday. French, German, and Swiss banks are expected to have days off in observance of Whit Monday.

Why should you care? The Forex, CFD, and financial markets could be slower and quieter in their price movements at the start of the European open due to the German and French holidays. London and New York will be open as usual.

US Non-Manufacturing PMI Released on Monday, 5 June

The PMI (Purchasing Manufacturing Index) is a survey that evaluates the business conditions of 400 purchasing managers in different areas, such as inventories, employment, new orders, and more. A figure above 50.0 indicates expansion, whereas a figure below 50.0, contraction.

Why should you care? It's a leading indicator of business conditions as the purchasing managers react quickly to the changing market conditions. The previous figure in the US was 57.5, and the forecast has now been made for 57 (*).

Australian and Indian Interest Rate Decision Announced on Tuesday, 6 June, and Wednesday, 7 June

The Reserve Bank of Australia (RBA) and Reserve Bank of India (RBI) are expected to release their interest rate decision for June. The Reserve Bank Board members need to reach a common consensus on the best rate for the country considering price stability, full employment, and the general economic prosperity of Australia and India.

Why should you care? The interest rate is a key part of the monetary policy and rather a critical factor in the currency value. Higher interest rates are more attractive as well as increase demand, whereas lower interest rates lead to lower demand. The previous rate in Australia is 1.5%, and the forecasted figure stands at 1.5% (*). The previous rate in India, however, is 6.25%, with the forecasted figure being 6.25% (*).

Parliamentary Elections in the UK Taking Place on Thursday, 8 June

New elections were suggested by Prime Minister Theresa May and approved by the Parliament in April 2017. This happened just a few weeks after the official start of the Brexit process, when the UK triggered article 50 of the Treaty on the EU, which handles the withdrawal of members.

Why should you care? The elections will not only indicate who will govern the UK for the next 5 years, but also who will lead the Brexit negotiations with the EU and with which goals. Depending on the negotiated details, the Brexit process could in turn impact the Great British Pound (GBP).

China Releases Its Balance of Trade on Thursday, 8 June

The trade balance indicates the difference in value between imported and exported goods during the previous month.

Why should you care? The exports demand impacts the demand for currencies as importers buy domestic currency to purchase local goods and services. The previous figure for trade balance is $38.05B (*).

Euro Interest Rate Decision Announced on Thursday, 8 June

The European Central Bank (ECB) is expected to announce the new interest rate level for the Eurozone. An ECB press conference is to take place soon, where ECB President Mario Draghi will read out a prepared statement before addressing questions from the press.

Why should you care? The interest rate is a key part of the monetary policy and a critical factor in the currency value. Higher interest rates are more attractive and increase demand, whereas lower interest rates lead to lower demand. The previous rate in Australia is a flat 0.0%, and the forecasted figure still remains at 0.0%. (*)

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Source: Euro Interest Decisions Since 2011

Germany and UK Trade Balance Released on Friday, 9 June

The trade balance indicates the value difference in imported and exported goods during the month. On Friday, both the UK and Germany will announce their figures.

Why should you care? A country with more exports than imports will see more demand for its currency as the importer must pay for the goods in the local currency. In Germany, the previous figure stands at EUR 25.4B (*). In the UK, at GBP -4.90B (*).

Unemployment Rate in Canada Announced on Friday, 9 June

The figure indicates both the percentage of the unemployed in total and the people seeking employment, for the previous month. It is a critical signal of the country's overall economic well-being.

Why should you care? Higher levels of unemployment often dampen consumption, whereas lower levels spur economic growth. The previous figure in Canada stands at 6.5% (*).

(*) Admiral Markets – Forex Calendar