In the new week, there are several central bank decisions to anticipate, featuring live meetings at the Reserve Bank of Australia and the Bank of England. The spotlight will also be on crucial US employment data, including Nonfarm Payrolls. Additionally, Canada and New Zealand will be releasing their job market data, while Eurostat is set to unveil inflation and growth data.
Mark Your Calendar With the Essential Events for the Week:
Following the FOMC meeting, all eyes in the US will be on job data. On Tuesday, we have the JOLTS Job Openings report; on Wednesday, ADP Private Employment; on Thursday, the weekly Jobless Claims, and the Unit Labor Cost; and on Friday, the highlight of the week, Nonfarm Payrolls. Forecasts indicate an expected addition of 180,000 jobs in July, with the Unemployment Rate projected to remain at 3.6%. Additionally, keep an eye on the ISM Manufacturing PMI on Tuesday and the ISM Service PMI on Thursday, as they are also relevant indicators to watch.
Throughout the week, the US Dollar displayed a strong performance, positioning itself among the top gainers. This surge was bolstered by favorable US economic data. However, for the rally to sustain its momentum, the Greenback requires another series of positive figures. Encouragingly, the DXY secured its second consecutive weekly gain, primarily driven by Thursday’s rally prompted by robust US GDP data, successfully closing above 101.50. While some technical challenges persist, the currency continues its recovery journey from its one-year lows.
As the week concluded, US Treasury yields experienced an upswing, providing support to the US Dollar. The 10-year yield briefly surpassed the 4.0% mark before retracing, while the 2-year yield stabilized around 4.9%. In a similar vein, Eurozone bond yields also climbed, albeit at a more measured pace.
EUR/USD:For the second consecutive week, the market experienced a decline, stepping further away from its one-year highs. The currency pair hit a low of 1.0940 but managed to recover above 1.1000. While the primary trend remains upward, the Euro’s momentum appears to be waning.
Looking ahead, Germany is scheduled to release its Retail Sales report on Monday and the Unemployment Rate on Tuesday. On Monday, the preliminary July Eurozone Consumer Price Index is also anticipated, with an expected slowdown in the annual rate from 5.5% to 5.2%. Furthermore, Eurostat is set to publish the Eurozone Producer Price Index (PPI) on Thursday, followed by Retail Sales on Friday.
GBP/USD concluded the week with little change, maintaining a position around 1.2850/60 following a limited corrective movement. A significant upcoming event is the Bank of England Monetary Policy Committee meeting, during which the central bank is likely to announce a rate hike on Thursday. The main point of contention revolves around whether it will be a 25- or 50-basis-point increase. Inflation and wage growth support the possibility of a 50 basis point hike, while indications of a slowing labor market and a cautious economic outlook favor a smaller hike.
After experiencing volatility on Friday, USD/JPY wrapped up the week with a modest decline, settling near 141.00 and far from the lows seen after the Bank of Japan’s unexpected move. Market participants will closely monitor hints regarding the central bank’s future actions and the potential for significant changes in its monetary policy stance. Any signals toward normalization could bolster the Japanese Yen.
USD/CHF demonstrated its second consecutive week of gains, continuing its recovery from multi-year lows and finishing just below 0.8700. Switzerland is scheduled to release the July Consumer Price Index on Thursday, with an anticipated drop in the annual rate from 1.7% to 1.5%.
AUD/USD struggled to maintain levels above 0.6800 and continued to hover around 0.6600. The currency pair persists in displaying sideways movement. On Tuesday, the Reserve Bank of Australia (RBA) is scheduled to hold its monetary policy meeting, with market expectations of a 25-basis-point rate hike.
NZD/USD also lacks a clear direction after facing resistance below 0.6400. It approached the support zone near 0.6100. In the early hours of Wednesday, New Zealand will unveil its Q2 employment report, encompassing the Unemployment Rate and the Labor Cost Index.
USD/CAD experienced a slight uptick but remains capped below 1.3250. The pair’s bias still leans toward the downside. Canada will release its employment report on Friday, following an impressive increase of 59,900 jobs in June.
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