June 2021 FX Outlook
Economic Calendar
- June 1: Reserve Bank of Australia meeting
- June 2: Bank of India meeting
- June 4: US and Canada’s employment report
- June 6: Mexican legislative and local elections
- June 9: China’s consumer and producer prices
- June 10: European Central Bank meeting
- June 10: US consumer prices
- June 11-13: G-7 Summit
- June 16: Federal Reserve meeting
- June 16: Central Bank of Brazil meeting
- June 17: Turkey Central Bank meeting
- June 18: Bank of Japan meeting
- June 24: Bank of England meeting
- June 24: Bank of Mexico meeting
The major currencies that have strengthened against the US dollar so far this year share one thing in common. Their respective central banks have indicated an adjustment in either their forward guidance and/or have slow their bond purchases. These include Canada, Norway, the UK, and New Zealand. The Australian dollar is an exception as it has posted negligible gain (less than 0.2%). Japan, where the vaccine rollout is lagging behind the OECD countries, and continues to experience deflation, is the weakest of the major currencies, losing 6% in the first five months of the year.
The large US budget deficit has helped fuel a strong economy rebound, while the growth differentials have contributed to record trade deficits. Typically, in the face of yawning shortfalls, the US must offer higher interest rates or the dollar bears a greater burden in the adjustment process. The most the Federal Reserve has conceded is that it may begin talking about tapering in the coming months. By doing so, it is signaling comfort with the orderly pace of the dollar’s decline. The June 16 FOMC meeting and press conference may be among the most important events in June.
Marc Chandler
Managing Director
Bannockburn Global Forex
www.bannockburnglobal.com
