- Independence Day in the US makes the macro calendar thinner
- Swedish central bank is in the limelight for today
- PMIs important for GBP and CAD
As US is on holiday for today market’s focus turns towards other events. The most noteworthy one scheduled on Tuesday seems to be the Riksbank’s meeting which could be potentially encouraged to a more hawkish tilt. Besides, there are two PMI readings from the UK as well as Canada. Let us present all macro events on Tuesday.
8:30 am BST - Riksbank’s decision: There is no doubt that major central banks have struck in a more hawkish tilt of late, hence there are some expectations that the Swedish Riksbank will follow suit them. It appears that for Swedish policymakers the ECB and Norges Bank are among two the most relevant central banks - both have voiced hawkishness recently what, as a result, has buoyed their currencies. When it comes to today’s meeting there is guesswork that the Riksbank could dump its forecast of a further rate hike (3 bps was priced in in its rate path). Otherwise, the consensus suggests that the main rate will be maintained at -0.5%.
9:30 am BST - UK’s construction PMI: The British pound experienced an excellent performance in the prior week, mainly on the back of a shift in the BoE’s tone with Governor Carney suggesting a possible need of a rate hike. As the main reason for higher rates stems from the exchange-rate, it’s not obvious whether a rate increase would be GBP-positive under current circumstances (slowing growth and deteriorating data). It’s worth recalling that the manufacturing PMI, published yesterday, fell short of estimations, hence there could be some concerns that today’s reading will be subpar as well.
2:30 pm BST - Canadian manufacturing PMI: There has been stellar performance for the CAD of late. Hawkish remarks in conjunction with a bit better than expected data have provided a boost for the Canadian currency. However, expectations have been blown up quite severely as of late, and there is a possibility of disappointment at the BoC’s July meeting which will take place in the following week. Having said that, if today’s PMI turns out feeble, it could prompt more traders to exit the short positions on the USDCAD. If so, the pair could go towards a broken long-term trend line as it’s been depicted at the chart below.