The fundamental forces have sent the EURUSD to new 2017 year highs. The risk over the French election has dissipated which gave the EUR/USD a relief rally. The EURUSD rallied to more than 6-month high in French election relief rally. The focus now is shifting towards Jun’s Fed interest rate decision. The market has become complacent in the Fed’s ability to gradually hike rates so that can also add fuel to the recent EURUSD rally through USD selling pressure.
June is set to be an interesting month with major risk events that can disrupt the EURUSD volatility. Seasonally speaking the Euro has a strong tendency to be kept in a very volatile range for the entire month. The seasonal pattern only gives us the tendency of a particular currency to exhibit a certain behavior at a certain time, so we have to carefully monitor the pattern and how the fundamental forces interact with the price action. Going forward, we’re going to analyze and disseminate the major news event for the upcoming month that can be the catalyst for higher EURUSD volatility.
“Don’t risk significant money in front of key reports, since that is gambling not trading.”
– Paul Tudor Jones
Monthly Forex News Events that Might Affect EURUSD Volatility – June 2017
The month of June will bring several risk events that can be the catalyst for the EURUSD to exhibit higher volatility. Without a doubt, the main risk event will be the Fed interest rate decision. The Fed has left the door open for a June rate hike and failure to meet those expectations can cause some volatility in the markets. However, we need the fundamental to shift and current monetary policy stances to reinforce the higher EURUSD exchange rates.
- Thursday, June 1, 2017 – First day of the months kicks off with the OPEC meeting, which is scheduled twice a year and held in Vienna. The market consensus is for the Oil-rich nations to extend production cuts into 2018.
- Friday, June 2, 2017 – The Non-Farm Payrolls Report is one of the most awaited figures especially for Forex traders. The unemployment rate unexpectedly continued to drop from 4.6% down to 4.4%, the lowest level since 2007. The new jobs added also rebounded above the 200k mark.
- Thursday, June 8, 2017 – The ECB interest rate decision followed by the ECB monetary policy and press conference. The ECB looks ready to unwind its QE program and any hints towards a shift in the monetary policy can be the trigger for some volatility. The EU economic growth has picked up and inflation is rising as well, which is reason enough for the ECb to start thinking to do their own version of tapering.
- Tuesday, June 13, 2017 – The US PPI inflation figure which is the Fed’s preferred measurement of inflation can trigger some volatility in the market. The annualized PPI inflation rate is at 2.5% well above Fed’s 2% inflation target.
- Wednesday, June 14, 2017 – The Fed interest rate decision followed by Janet Yellen press conference will be the highlight of the month. Right now the market is only pricing in just one more rate hike while the Fed is still looking to hike two more times. The US economic data was very weak in the first quarter of the year, missing market expectation which can put the Fed on hold in June.
- Thursday, June 22, 2017 – The European Council meeting can be the catalyst for some market volatility. The Brexit talks should be on the main agenda, among other EU issues. The relief provided by Macron winning the French presidency means that we’ll have a more relax meeting.
- Monday, June 26, 2017 – The US Durable Goods Orders missed market expectation and only rose 0.7% showing a loss of momentum in the manufacturing sector.
- Thursday, June 29, 2017 – The US Final GDP figures are scheduled to be released. The US economy grows at a 2.1% rate during the first quarter of 2017. The manufacturing activity can be boosted of the Trump’s tax plan gets through.
- Friday, June 30, 2017 – The EU CPI inflation figure is the last risk event for June. The Eurozone CPI inflation remains at strong levels close to hitting the ECB 2% inflation target. However, the ECB inflation forecast remains firm and there are no sights that the ECB will change its QE program so early.
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