Summary:

• Trump meets with NK leader Kim Jong Un, markets hope for a breakthrough in terms of denuclearization
• Fed and ECB meet later this week, major attention to ECB’s possible APP exit plan
• Industrial data from the UK should draw attention today

This week is full of crucial economic events and reports. If reports on inflation in the US or Europe do not make the “Top 3” list you know the week is going to be very intensive. A decision made by Fed or the ECB is usually very important itself and this time these banks meet in a span of 24 hours. On the geopolitical front a focus will be on the meeting between Donald Trump and Kim Jong Un in Singapore. Before these events take place let’s glance what was scheduled for Monday.

9:30 am BST – UK industrial, construction production and trade balance: The British pound had drawn quite an encouraging pattern at a weekly interval two weeks ago, and a bullish shape was confirmed last week. As a result one may hope for a turnaround on the GBPUSD as the US dollar seems to be slowly losing steam. In this respect a package of today’s hard data could be relevant for the pound. The consensus points to 2.7% yoy when it comes to industrial production, -1.4% in case of construction output while trade balance is forecast to bring a lower deficit – all prints for April.

What to watch next?

The FOMC meeting (Wednesday, 7:00pm GMT): The Fed is widely expected to increase interest rates to the extent that a lack of such move would be a major surprise. The question for the markets is: what’s next? Will the Fed communicate a need of 4 hikes in 2018? Will we learn anything about plans beyond this year? Answers to these questions could be decisive for the dollar and stocks. Remember that there will be a post-meeting conference 30 minutes after the decision on rates. Affected markets: US500, USDJPY.  

The ECB meeting (Thursday, decision 12:45pm GMT, conference 1:30pm GMT): Stakes ahead of this meeting have risen recently as some MPC members suggested it could be “pivotal” in terms of signalling termination of the bond purchase program. The euro gained as a result and markets started speculating about a possible rate hike in 2019. Investors will be disappointed unless the ECB presents the QE-exit plan. Affected markets: DE30, EURUSD.

Trump – Un meeting in Singapore (Tuesday): President Trump has ambitious targets heading for this historic meeting with the leader of North Korea but there’s a general disbelief that a denuclearization of that country could follow quickly. Given how the attitude of the president could change (remember that Trump cancelled this meeting before reviving it just 8 days later), traders should monitor a situation closely. Affected markets: GOLD, TNOTE.

The GPBUSD may look getting more interestingly for buyers after drawing two bullish candlesticks. Source: xStation5