Economic Indicators Investors Should Watch This Week
The most important indicators for this week are the flash manufacturing PMIs. Many policymakers use the reports during their decision-making process.
On Friday, June 16, the Bank of Japan (or BOJ) left its policy rate and economic assessment unchanged.
The British pound (FXB) fell against most of the major currencies in the previous week as markets digested the surprisingly hawkish tone of the Bank of England’s (or BOE) monetary policy statement.
The euro (FXE) remained in a narrow trading range against the US dollar (UUP) between the levels of 1.130 and 1.115 for the last five weeks.
The US dollar (UUP) index continued to be confined to a range with the US Dollar Index closing for the week at 97.5, a change of 0.09% as compared to last week’s close of 97.2.
The Fed’s decision had a limited impact on the S&P 500 (SPY), which closed last week at 2,433.2, a gain of 0.06% for the week.
In this series, we’ll analyze how different asset classes like bonds (BND) and global equities (VTI) reacted to last week’s central bank events.
On June 15, the day after the FOMC statement, most global markets traded with a negative tone.
The US Dollar Index (USDX) touched a high of 103.81 on January 1, 2017, and has since lost ground as political and policy uncertainty dominated the US economic outlook.
On June 14, the FOMC raised the federal funds rate by 0.25% to 1.00–1.25%. The FOMC’s surprise announcement addressed its plans to unwind the Fed balance sheet later in 2017 if the economy performs according to its members’ expectations.
The Japan Manufacturing PMI stood at 53.1 in May 2017, as compared to 52.7 in April, outperforming the preliminary market estimation of 52.0.
The Japanese yen (FXY) ended last week at 110.30 against the US dollar (UUP) and close to the previous week’s close of 110.42.
The FOMC (Federal Open Market Committee) will be the focus this week as its members meet on Wednesday, June 14, 2017, to decide on the US rate policy.
The euro (FXE) closed the week at 1.1196 to the US dollar (UUP), posting a 0.76% loss compared to the previous week.
Britain had a shocker last week as a hung parliament outcome in the snap elections will likely keep political uncertainty intact.
The S&P 500 index (SPY) managed to close with minimal losses last week, closing at 2,431.77 compared to 2,433.79 the week before.
The dollar managed to turn around from lower levels last week as risks from former FBI Director James Comey’s testimony and the ECB’s policy statement subsided.
An eventful week came to an end on Friday, June 9, 2017, with no major meltdowns in the markets. The UK elections were the only surprise.
Brexit negotiations have already begun. However, the market now expects some delay in the negotiation process due to the UK election’s outcome.
The surprise result of the UK’s hung parliament outcome creates uncertainty in the UK political space, and it’s also likely to impact Brexit negotiations.