FX Week Ahead - Top 5 Events: UK Inflation, Canada Inflation, Fed Meeting, New Zealand GDP, BOJ Meeting

06/19 WEDNESDAY | 08:30 GMT | GBP CONSUMER PRICE INDEX (MAY)

With oil prices falling more than 20% from their 2019 highs, measures of inflation are being pulled lower across the developed world – and the UK should not be immune from this emerging trend of disinflationary pressures. According to a Bloomberg News survey, the forthcoming May UK inflation report is due to show headline inflation in at 2% from 2.1% (y/y), while the monthly reading is due in a 0.3% from 0.6%. Core CPI is expected to have eased to 1.7% from 1.8% (y/y).

06/19 WEDNESDAY | 12:30 GMT | CAD CONSUMER PRICE INDEX (MAY)

The pullback in oil prices in recent weeks appears ready to put a cap on the rebound in Canada inflation – no different than what’s being experienced across the rest of the developed economic world. Crude oil prices plunged by -15.9% in May, weighing significantly on the yearly performance: at their peak, crude oil prices were up by 46.7% in 2019; at the time of writing, they were only up by 16.2% in 2019. Accordingly, a Bloomberg News survey shows consensus forecasts pointing to headline May Canada inflation due in at 2%(y/y), unchanged from April’s pace of price pressures. The monthly reading is due in at 0.1% from 0.4% (m/m), clearer evidence disinflation is starting to appear.

06/19 WEDNESDAY | 18:00 GMT | USD FEDERAL RESERVE RATE DECISION & POWELL PRESS CONFERENCE

With trade war concerns raging and global financial markets’ volatility steadily pushing higher, the Federal Reserve’s June meeting on Wednesday comes at a critical moment. The prospect of the US economy’s record 10-year expansion being threatened has garnered the attention of policymakers, with Fed Chair Jerome Powell saying that the Fed would “act as appropriate” if needed in a speech at the start of June. Overall, interest rate odds have taken an aggressive dovish turn, pulling forward expectations of three 25-bps rate cuts into 2019. While the Fed is unlikely to act in June, it’s very possible that they initiate the first rate cut as soon as the next meeting in July.

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