Weekly Forex Forecast: July 27 – 31

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The Euro single currency emerged on the top last week as the risks of the Greek debt crisis showed signs of abating. Despite a shift to fundamentals, which should have seen the Euro weaken, the single currency managed to gain 1.37% for the week against the Greenback. The Kiwi dollar came in at a second close. This, despite the fact that the RBNZ cut rates by 25bps last week. The currency was well oversold expecting the RBNZ to cut rates and the recent gains by the Kiwi is more likely to be a short squeeze than a change of trend. The market expectations are for another 25bps rate cut at the next meeting.

Weekly Spot FX Performance – 24/07/2015 (Source: Finviz.com)
Weekly Spot FX Performance – 24/07/2015 (Source: Finviz.com)

On the tail end, the Aussie was the weakest currency last week falling -1.25% for the week. There were no major economic releases to justify the decline. The British Pound was also weaker last week falling -0.59% against the Greenback, largely due to weaker than expected retail sales data and the BoE minutes showing the MPC members saying unanimous for keeping rates steady at 0.5%.

Fundamentals for the Week July 20 – 24

Date Time Currency Detail Forecast Previous
27-Jul 02:50 JPY SPPI y/y 0.60% 0.60%
09:00 EUR German Import Prices m/m 0.20% -0.20%
11:00 EUR German Ifo Business Climate 107.6 107.4
EUR M3 Money Supply y/y 5.10% 5.00%
EUR Private Loans y/y 0.70% 0.50%
13:00 GBP CBI Industrial Order Expectations -4 -7
15:30 USD Core Durable Goods Orders m/m 0.40% 0.00%
USD Durable Goods Orders m/m 3.20% -2.20%
28-Jul 28th-30th GBP Nationwide HPI m/m 0.20% -0.20%
11:30 GBP Prelim GDP q/q 0.70% 0.40%
GBP Index of Services 3m/3m 0.50% 0.50%
15:30 CAD RMPI m/m 4.40%
CAD IPPI m/m 0.30% 0.50%
16:00 USD S&P/CS Composite-20 HPI y/y 5.20% 4.90%
16:45 USD Flash Services PMI 55.1 54.8
17:00 USD CB Consumer Confidence 100.1 101.4
USD Richmond Manufacturing Index 6 6
29-Jul 02:50 JPY Retail Sales y/y 1.10% 3.00%
09:00 CHF UBS Consumption Indicator 1.73
EUR GfK German Consumer Climate 10.2 10.1
11:30 GBP Net Lending to Individuals m/m 3.0B 3.1B
GBP M4 Money Supply m/m 0.40% 0.50%
GBP Mortgage Approvals 66K 64K
13:00 GBP CBI Realized Sales 31 29
17:00 USD Pending Home Sales m/m 1.20% 0.90%
17:30 USD Crude Oil Inventories 2.5M
21:00 USD FOMC Statement
USD Federal Funds Rate <0.25% <0.25%
30-Jul 01:45 NZD Building Consents m/m 0.00%
02:50 JPY Prelim Industrial Production m/m 0.40% -2.10%
03:30 AUD RBA Gov Stevens Speaks
04:30 AUD Building Approvals m/m -0.90% 2.40%
AUD Import Prices q/q 1.40% -0.20%
All Day EUR German Prelim CPI m/m 0.20% -0.10%
10:00 CHF KOF Economic Barometer 90.3 89.7
EUR Spanish Flash CPI y/y 0.10% 0.10%
EUR Spanish Flash GDP q/q 1.10% 0.90%
10:55 EUR German Unemployment Change -5K -1K
11:00 EUR ECB Economic Bulletin
Tentative EUR Italian 10-y Bond Auction 2.35|1.4
15:30 USD Advance GDP q/q 2.60% -0.20%
USD Unemployment Claims 264K 255K
USD Advance GDP Price Index q/q 1.50% 0.00%
17:30 USD Natural Gas Storage 61B
31-Jul 02:05 GBP GfK Consumer Confidence 5 7
02:30 JPY Household Spending y/y 2.00% 4.80%
JPY Tokyo Core CPI y/y 0.00% 0.10%
JPY National Core CPI y/y 0.00% 0.10%
JPY Unemployment Rate 3.30% 3.30%
04:00 NZD ANZ Business Confidence -2.3
04:30 AUD PPI q/q 0.50%
AUD Private Sector Credit m/m 0.50% 0.50%
08:00 JPY Housing Starts y/y 3.20% 5.80%
09:00 EUR German Retail Sales m/m 0.30% 0.50%
09:45 EUR French Consumer Spending m/m 0.70% 0.10%
11:00 EUR Italian Monthly Unemployment Rate 12.30% 12.40%
12:00 EUR CPI Flash Estimate y/y 0.20% 0.20%
EUR Core CPI Flash Estimate y/y 0.80% 0.80%
EUR Unemployment Rate 11.00% 11.10%
EUR Italian Prelim CPI m/m 0.00% 0.10%
15:30 CAD GDP m/m 0.00% -0.10%
USD Employment Cost Index q/q 0.60% 0.70%
16:45 USD Chicago PMI 50.7 49.4
17:00 USD Revised UoM Consumer Sentiment 94.2 93.3
USD Revised UoM Inflation Expectations 2.80%

 

Currencies/Events to Watch this Week

Australia building approvals and PPI: The Aussie dollar will see the building approvals data and the producer price index this week. Expectations are for building approvals to rise 1.4%. Australia’s quarterly PPI rose 0.5% last month up from 0.1% the month before, thus a bullish print on the PPI is likely to give a boost to consumer inflation as well.

Canada GDP: After the BoC cut rates this month, the Canadian dollar weakened substantially. Economic data continues to remain mixed and the week ahead will see the monthly Canadian GDP. Expectations are for the GDP to stay flat for the month. Taken in combination with the US advance GDP a miss of estimates could further weaken the Canadian dollar in the event the US GDP numbers post a strong print.

Eurozone Flash CPI and ECB minutes: There are no major economic events from the Eurozone this week and the focus remains on the fundamentals. The Eurozone flash CPI data is due this week which is expected to stay unchanged. Also on the agenda will be the ECB’s economic bulletin which will reveal the minutes from the ECB’s meeting last month.

UK Preliminary GDP: The second quarter GDP for the UK is due this week and expectations are for a strong beat of 0.7%, up from 0.4% growth posted in the first quarter. The GDP print is likely to influence the BoE’s MPC voting members view as a stronger than expected print is likely to see the BoE start to shift market expectations regarding interest rate hikes. The BoE Governor has also been hawkish, as noted few weeks ago that the next policy change from the BoE would be for a rate hike.

Japan Retail sales: The economic calendar for the Yen is light this week with the exception of the retail sales data, which is expected to grow at a slower pace of 1.1% after rising 3% last month. The Japanese unemployment rate is also due this week and expected to stay unchanged at 3.3%. Other economic data includes the CPI numbers from Tokyo and the National Core CPI.

FOMC and Advance GDP: The Greenback heads into an important week as the Federal Reserve releases its monthly monetary policy. There will be no press conference at this meeting and policy is very likely to stay unchanged. Markets will be focusing on the tone of the statement to look for any shift in the Fed’s language for rate hikes. With Janet Yellen, in two instances last week reiterating the Fed’s stance for rate hikes this year, the expectations are hawkish. A day after the Fed’s FOMC statement, the US second quarter advance GDP is due for release. Expectations are for the second quarter GDP to have grown 2.6%. A beat on estimates is very likely to cement the view for the Fed to turn hawkish, although the markets need to see another month of a robust jobs report.

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