Week Ahead – Market Recovery Under Threat?

The New Normal

Another crazy week comes and goes and thing that has really stuck with me is how normal the extraordinary suddenly seems. On Thursday, the Dow fell almost 7% and, sure, it was newsworthy but it wasn’t shocking. This is the 22nd biggest ever drop in the index – going back more than 100 years – and yet this year it doesn’t even make the top three.

This could be a sign of the fragility that remains in the markets but then, the NASDAQ hit new record highs in each of the prior four days and breached 10,000 for the first time ever. This comes before the end of what could be the worst quarter in a century for the economy. Incredible.

Speculation around new waves of coronavirus cases is going nowhere any time soon, as countries look to reopen their economies and save businesses and jobs. But next week also brings a plethora of interest rate decisions as well which means more rate cuts and more asset purchases. In other words, more fuel for the fire. The disconnect between the markets and the global economy isn’t going to improve any time soon.

Key Economic Releases and Events

Monday 15th June

Time (UK) Country Indicator Name Period
00:01 United Kingdom House Price Rightmove MM May
03:00 China (Mainland) Urban Investment (YTD)YY May
03:00 China (Mainland) Industrial Output YY May
03:00 China (Mainland) Retail Sales YY May
03:30 Singapore Unemployment Rate Final SA Q1
Indonesia Trade Balance (Bln of $) May

Tuesday 16th June

07:00 United Kingdom Claimant Count Unem Chng May
07:00 United Kingdom ILO Unemployment Rate Apr
07:00 United Kingdom Employment Change Apr
07:00 United Kingdom Avg Wk Earnings 3M YY Apr
07:00 United Kingdom Avg Earnings (Ex-Bonus) Apr
09:30 Hong Kong Unemployment Rate May
10:00 Germany ZEW Economic Sentiment Jun
13:30 United States Retail Sales Ex-Autos MM May
13:30 United States Retail Sales MM May
13:30 United States Retail Ex Gas/Autos May
14:00 Russia Industrial Output May
14:15 United States Industrial Production MM May
14:15 United States Capacity Utilization SA May
14:15 United States Industrial Production YoY May
15:00 United States Business Inventories MM Apr
21:30 United States API weekly crude stocks 8 Jun, w/e
Japan JP BOJ Rate Decision 16 Jun

Wednesday 17th June

00:50 Japan Trade Balance Total Yen May
01:30 Singapore Non-Oil Exports MM May
01:30 Singapore Non-Oil Exports YY May
07:00 United Kingdom Core CPI YY May
07:00 United Kingdom CPI YY May
08:30 Sweden Unemployment Rate May
08:30 Sweden Total Employment May
10:00 Euro Zone Construction Output MM Apr
10:00 Euro Zone HICP Final MM May
10:00 Euro Zone HICP Final YY May
12:00 South Africa Retail Sales YY Mar
13:30 United States Building Permits: Number May
13:30 United States Housing Starts Number May
13:30 Canada CPI Inflation MM May
13:30 Canada CPI Inflation YY May
14:00 Russia GDP YY Quarterly Revised Q4
15:30 United States EIA Weekly Crude Stocks 12 Jun, w/e
23:45 New Zealand GDP Prod Based QQ, SA Q1
23:45 New Zealand GDP Prod Based YY, SA Q1
23:45 New Zealand GDP Prod Based, Ann Avg Q1
23:45 New Zealand GDP Exp Based QQ, SA Q1

Thursday 18th June

02:30 Australia Employment May
02:30 Australia Full Time Employment May
02:30 Australia Participation Rate May
02:30 Australia Unemployment Rate May
08:30 Switzerland SNB Policy Rate Q2
09:00 Norway Key Policy Rate 18 Jun
12:00 United Kingdom BOE Bank Rate Jun
12:00 United Kingdom Asset Purchase Prog Jun
12:00 United Kingdom GB BOE QE Gilts Jun
12:00 United Kingdom GB BOE QE Corp Jun
12:00 United Kingdom BOE MPC Vote Hike Jun
12:00 United Kingdom BOE MPC Vote Unchanged Jun
12:00 United Kingdom BOE MPC Vote Cut Jun
13:30 United States Initial Jobless Claims 8 Jun, w/e
13:30 United States Jobless Claims 4-Wk Avg 8 Jun, w/e
13:30 United States Continued Jobless Claims 1 Jun, w/e
13:30 United States Philly Fed Business Indx Jun
14:00 Russia Cbank Wkly Reserves 8 Jun, w/e
15:00 United States Leading Index Chg MM May
Indonesia 7-Day Reverse Repo Jun
Indonesia Deposit Facility Rate Jun
Indonesia Lending Facility Rate Jun

Friday 19th June

00:30 Japan CPI, Core Nationwide YY May
00:30 Japan CPI, Overall Nationwide May
07:00 United Kingdom Retail Sales MM May
07:00 United Kingdom Retail Sales Ex-Fuel MM May
07:00 United Kingdom Retail Sales YY May
07:00 United Kingdom Retail Sales Ex-Fuel YY May
11:30 Russia Central bank key rate Jun
13:30 Canada Retail Sales MM Apr
13:30 Canada Retail Sales Ex-Autos MM Apr
Russia GDP YY Monthly May
Russia Retail Sales YY May
Russia Unemployment Rate May
Russia Real Wages YY Apr



It seems a second wave of the coronavirus is hitting the US and could very well derail a lot of the reopening momentum that was taking place.  As states reopen and Americans return to pre-pandemic behavior, it is expected that a rise in new coronavirus cases would occur.  The White House is convinced they have yet to see any relationship between reopening and increased cases.  If hospitalizations continue to increase, you could see many individuals decide to remain a part of the stay-at-home economy.  If the virus spread intensifies, restrictions will be tightened and that will put a damper on the economic recovery prospects.  

On Tuesday, Fed Chair Powell will follow his downbeat FOMC presser with his semi-annual monetary policy report to the Senate Banking Committee.  With little time between events, it is unlikely for Powell to deviate from Wednesday’s rate decision.  Traders will also pay close attention to the release of US retail sales, which is expected to show a rebound from the record low seen in April.  

US Politics

Economic jitters and virus concerns will likely push the Trump administration into supporting a second round of stimulus payments for Americans.  Coronavirus relief talks were not supposed to happen until late July, but that should change given the recent jump in cases throughout the country. 

On Friday, President Trump returns to the campaign trail in Oklahoma, his first live rally since March.  

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.


The UK experienced its sharpest contraction on record in April, the first full month of the lockdown. The economy contracted by 20.4% at the start of the second quarter which is expected to be the worst month of the three. 

Next week the Bank of England is expected to increase its bond buying in response to the pandemic, with £100-200 billion added to its quantitative easing program. This comes as government borrowing spikes to fund the crisis which would have otherwise risked pushing up borrowing costs.


High level talks between Boris Johnson and Ursula Von Der Leyen are expected to take place next week, possibly as early as Monday, as the two sides look to reconcile the significant differences ahead of the 31 December transition expiry. As it stands, no deal is the default and the UK is expected to formally rule out an extension once again. We’ve seen this all before though and compromise tends to come late in the day. Still, business could very much do without this in a pandemic year.


The Central Bank of Russia is expected to cut interest rates by 50-100 basis points when it meets next week, from 5.5% where it currently stands. Like many others, the economy has been ravaged by the coronavirus crisis and contracted 12% in April, and May is not expected to be any better.


The SNB is not expected to cut interest rates next week, with the main policy rate remaining at -0.75%. The central bank is active in FX markets, with its holdings of foreign currencies recently rising above 800 billion Swiss francs – greater than the output of its economy – as it seeks to stop the currency rising too far as a result of safe haven flows. The central bank hasn’t set an official floor for the EURCHF pair – hopefully learning lessons of the past – but 1.05 is believed to represent the informal level. 


The Norges Bank is not expected to cut interest rates next week, with the main policy rate currently sitting at 0%.


China Industrial Production (4.5%E) and Retail Sales (-2.0%E) on Monday. Poor number could see Asian markets weaken depending on Wall Street’s friday performance. Ongoing tensions with the US over HK, trade and Covid-19. 

No other significant data this week.

Hong Kong

Protests have died down for now over the securities law. Possible resurgence this weekend. HSBC and Stan Chart under fire for backing China’s HK security law. No significant data this week.


Economy continues reopening but Covid-19 cases are spiking, markets negative. Standoff with China continues in the Himalayas but negotiations continue.


Australian stocks and Australian Dollar sold heavily on equity correction into the week’s end. Negative results on Friday for Wall Street should see that trend continue into the first part of the week. Australian markets are among most vulnerable to deep bull market correction. RBA minutes Tuesday. Will look for talk about negative interest rates.Potentially bullish for stocks. Unemployment Thursday (6.9% E) will drive intraday volatility. Otherwise what happens in the US will drive sentiment.


BOJ policy meeting Tuesday. Unchanged at -0.10% but looking out for more stimulus measures. Stocks positive. Tankan and Trade Balance Wednesday. Unlikely to impact markets. Markets will be led by Wall Street after sell-offs this week.



Oil didn’t escape yesterday’s backlash, with crude falling more than 5% on apparent fears around rising case numbers. Again, we have to take this in the context of an asset class that has done rather well over the last couple of months. It’s been some rebound and I think some serious profit taking may have kicked in. It’s creeping higher again today but $40 may remain an upside barrier for WTI.


Gold has been range-bound for the last couple of months since it first tried to break $1,750 only to quickly run out of steam. It’s tried again a few times since, each as unsuccessful as the last, and it looks to be suffering the same fate again this time. It’s pushing a little higher again as it looks to capitalize on dollar weakness but we could see it run into difficulties once again, unless the greenback continues its journey south.

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.