Edward Culchenko
June 21
12:30 GBP Public Sectоr Nеt Borrоwing
18:00 USD Eхisting Hоme Salеs
June 22
12:30 GBР Monetary Policy Committee Meеting Minutеs
20:30 USD FOMC Statement
20:30 USD Federal Funds Rate
22:15 USD FOMC Press Conference
June 23
Tentative GBР Inflatiоn Report Hеarings
16:30 USD Unemployment Claims
18:00 USD Nеw Home Salеs
June 24
13:30 GBP The Bank of England Governor Mervyn King Speаks
16:30 USD Cоre Durable Gоods Оrders
Having started last week with the minimal June level of 1.6215, GBP/USD currency pair has confidently started its ascending movement, having reached the week’s maximum of 1.6441. An hour before publishing consumer price index, the pair started to descend and, despite the fact that the resulted value proved analytics’ broadcast, we could observe a very rapid splash of volatility. In one minute’s time the pair has risen from 1.6397 level to 1.6434 level, having passed 37 points. Supposedly, after some reflections, it started to descend, having dropped by the end of the week to the minimum of 1.6078 and having passed the distance of 363 points. Consumer price index isasignificantinflationmark, for if it remains at the same level, this index indicates refinancing rate will not be raised in the nearest future. This was not a pleasant piece of news for investors and traders. Moreover, excellent fundamental data, retail sales and consumer price index around America encouraged further descending movement. The next push towards lower prices was a publication of jobless claims index in Britain, the value of which has exceeded analytics’ forecast almost two times. During next two minutes, the pair has dropped by another 54 points. The following negative data on retail sale in Great Britain, which have exceeded the forecasts three times, also contributed to the drop of pound sterling by 54 points. It was only on June 16 that data on manufacturing index of Philadelphia Federal Reserve System, for the first time during the week negative American data, pushed to ascending movement of the currency pair. Having passed 117 points up in two days’ time, the pair stopped at the value of 1.6178.
This week is very important, for we are to receive news from the Bank of England and Federal Reserve System.
On June 22 the Bank of Englandis going to publish Monetary Policy Committee Meеting Minutеs. A detailed record of another the Bank of England MPC meeting helps to gain an insight into economic conditions, which influenced the results of voting, during which the main interest rate was set. It also gives a hint on possible results of future voting. The most important part of these minutes is a distribution of members’ votes on setting the interest rate. The voting is being informed of in “X-X-X” format, where the first number is the quantity of voters, who supported interest rate increase, the second number indicates how many voters supported interest rate decrease, and the third number indicates how many voters wanted to leave the rate unchanged.
Moreover, these minutes include information on the last assets purchase by the Bank of England. During last three months three persons voted for interest rate increase. This time the broadcast shows that only two persons voted for interest rate increase, which gives evidence on rather hard economic condition of Great Britain. Concerning the volume of borrowings, the increase up to 16.3 billion pound sterling is expected against 7.7 billion pound sterling last month. On June 24 Mervyn King gives a speech at the press conference in London with a report on financial stability. Volatility is always very high during his speeches, for traders are trying to catch in his intonation hints concerning the interest rate of future monetary policy. Inflation report hearings before Parliament Treasury Committee, which is being delayed for more than one week, usually lasts for several hours, during which volatility is very high, especially if comments touch the situation at currency markets.
Events of equal importance are being published in America. On June 22 at 20.30 Moscow Time the world will be entered by the statement of Open Market Transaction Committee, which is the main instrument of FOMC and is used by the committee for communication with investors concerning monetary policy. The statement includes the result of voting on interest rate and other political measures, along with comments on economical conditions that influenced their votes. At the same time the main interest rate of Federal Reserve System will be published. In this reference, no alterations are apparently expected and the rate is to remain at the same very low level of 0.25%. However, the most important is the fact that the committee discusses economic perspective and gives hints on the results of future votes. At 22.15 the Chairman of Federal Reserve System mister Bernanke is going to give a speech at the press conference. The conference will last approximately one hour and will consist of two parts. At the beginning the prepared notice is read aloud, in which the new interest rate is touched as well as other strategic decisions that touch the future perspective of growth and inflation. The second part is intended for questions. Questions often lead to unprepared answers, which cause volatility of overloaded market. The press conference is transmitted via internet in real-time mode by Federal Reserve System. The importance of this event lies in the fact that this conference gives an idea concerning future monetary policy.
Data on real estate market is not very pleasant, as existing home sales and new home sales suppose small decrease, 4.83 million and 311,000 accordingly. As for durable goods orders, according to broadcasts, they are supposed to increase by 1.0% against the decrease by 1.6% in April.
Warrant support levels are 1.6074, 1.5999; closest warrant resistance levels are 1.6232, 1.6327, 1.6449, 1.6565
Prepared by Warrant Department of
Edward Culchenko
