Data heavy week for the currency markets

The beginning of a new month is generally a busy time for the markets especially with important economic indicators such as unemployment rates and monetary policy decision meetings. This week, the currency markets will see a lot many economic releases from across the G7 major currencies.

Here is a brief guide to the most important economic releases this week.

04/08 – Tuesday (AUD)

The Asian session will be busy starting with Australia’s economic indicators.

Australia Retail sales: Retail sales data for Australia is expected to have rise 0.5%, up from 0.3% a month ago. Retail sales fell from the highs of 0.7% growth seen last in March this year, just a month after the RBA had cut interest rates in February and remained at a subdued pace of 0.3% since May’s release.

RBA Interest Rate decision: The RBA last cut interest rates at its meeting in May, bringing the benchmark interest rates from 2.25% to 2%. Heading into the August monetary policy meeting, the consensus is for the RBA to hold the rates steady. But the tone and language of the central bank could shape the outlook for the Aussie in the near term.

The AUDUSD has weakened considerably this year, with the currency trading near 0.72 levels last seen in 2008.

05/08 – Wednesday (NZD, USD)

New Zealand Unemployment Rate: Wednesday is likely to see the Kiwi very volatile as the quarterly jobs report is due for release. Estimates are for the unemployment rate to have increased by a tick from 5.8% to 5.9% during the second quarter of this year. The RBNZ has been very dovish and cited further economic indicators to be reviewed before taking the next policy decision. In this regards, a weaker than expected print in the quarterly unemployment rate could see the Kiwi continue its downtrend and fall as investors start to slowly position for the next RBNZ rate cut.

ADP Employment Change: Markets will get a glimpse into how the US labour markets performed with the release of the ADP nonfarm employment change. Expectations are slightly dovish with 210k jobs being estimated to have been created last month. However, the ADP number is prone to revisions and thus is not an accurate precursor to the US NFP report. Regardless, a bullish print could see the US Dollar start to build bullish momentum ahead of the NFP report this week.

06/08 – Thursday (AUD, GBP)

Australia Unemployment Data: The monthly jobs report for Australia is due early on Thursday. Expectations are for the Australian unemployment rate to have increased from 6% (5.9% revised) to 6.1% in July. Of late, the Australian labour data has been very volatile and has seen sharp corrections and therefore, the markets are likely to react more cautiously.

BoE Inflation Report: The Bank of England will release its quarterly inflation outlook and the big question on everyone’s mind is whether the BoE will upgrade its view on inflation or if it expects to see inflation subdued at current levels. Oil prices have largely stabilized and have been trading mostly sideways since the past few months. The BoE’s inflation outlook is more or less likely to be revised modestly higher than from the previous quarterly expectations.

BoE Meeting & Minutes: Starting from the August monetary policy meeting, the Bank of England will release the minutes right after the monetary policy meeting. This is likely to see a lot of volatility. Expectations are for the board to stay unanimous on rate hikes, but going by the rhetoric from various BoE members, a shift in the 0 – 9 vote counts could see the markets turn bullish on the Pound Sterling. Maintaining the status quo would however see the Pound Sterling come under pressure.

07/08 – Friday (USD, CAD)

US NFP: The first of the two jobs report ahead of September’s FOMC meeting will be released this Friday. Expectations is for the US unemployment rate to stay put at 5.3%, while the monthly job numbers is expected to see 225k jobs being added. A modest expectation from 223k jobs added in June. It is quite likely that the NFP print could easily beat the estimates. However, a risk of missing the estimates could see a very sharp selloff in the US Dollar, as markets will be reminded of the weaker employment cost index seen last week.

Canada Jobs Report: After a relatively quiet week as far as the Canadian economy is concerned, the monthly jobs report will be due around the same time the US NFP will be released. Expectations are for the Canadian jobless rate to be steady at 6.8%, while expectations for the number of jobs rising to 5.7k from a decline of -6.4k last month. The Loonie has remained under pressure both from falling Crude Oil prices as well as a dovish BoC. A miss on the unemployment rate could turn the Canadian dollar even weaker. Expect the USDCAD to be very volatile on Friday as both the US and Canadian jobs report are released at the same time.