Weekly Forex Forecast: July 6 – 10

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The Japanese Yen emerged the top performing currency last week with the US Dollar tailing a close second. The Greece developments were clearly a catalyst as investors flocked to the safe haven Yen and the Greenback, shedding the more risky commodity currencies. Noticeably, in the risk off mode, the Kiwi, Aussie and Canadian dollars made up the tail end of the scale, losing close to -2% on average.

Despite the uncertainty, the Euro single currency managed to perform fairly stronger albeit weaker than the Greenback. For the week, EURUSD lost -0.44% but the single currency maintained a strong footing against the commodity risk currencies.

Figure 1: Weekly Spot FX Performance – 03/07/2015 (Source: Finviz.com)
Figure 1: Weekly Spot FX Performance – 03/07/2015 (Source: Finviz.com)

Economic data from the US supported the Greenback with the June payrolls report printing an ok jobs number. The US markets were closed on Friday making it a short trading week. The major focus remains this Sunday’s Greece referendum results.

Fundamentals for the Week July 6 – 10

Date Time Currency Detail Forecast Previous
06-Jul 03:30 AUD MI Inflation Gauge m/m 0.30%
04:30 AUD ANZ Job Advertisements m/m 0.00%
08:00 JPY Leading Indicators 106.20% 106.40%
09:00 EUR German Factory Orders m/m 0.00% 1.40%
6th-9th GBP Halifax HPI m/m 0.20% -0.10%
10:15 CHF CPI m/m 0.10% 0.20%
11:10 EUR Retail PMI 51.4
11:30 EUR Sentix Investor Confidence 15.6 17.1
GBP Housing Equity Withdrawal q/q -12.1B -13.0B
16:45 USD Final Services PMI 54.8 54.8
17:00 CAD Ivey PMI 56.2 62.3
USD ISM Non-Manufacturing PMI 56.5 55.7
USD Labor Market Conditions Index m/m 1.3
17:30 CAD BOC Business Outlook Survey
01:00 NZD NZIER Business Confidence 23
07-Jul 02:30 AUD AIG Construction Index 47.8
07:30 AUD Cash Rate 2.00% 2.00%
AUD RBA Rate Statement
08:45 CHF Unemployment Rate 3.30% 3.30%
09:00 EUR German Industrial Production m/m 0.10% 0.90%
09:45 EUR French Gov Budget Balance -59.8B
EUR French Trade Balance -3.3B -3.0B
10:00 CHF Foreign Currency Reserves 517.5B
11:30 GBP Manufacturing Production m/m 0.20% -0.40%
GBP Industrial Production m/m -0.30% 0.40%
Tentative GBP 30-y Bond Auction 2.86|1.6
15:30 CAD Trade Balance -2.5B -3.0B
USD Trade Balance -42.8B -40.9B
17:00 GBP NIESR GDP Estimate 0.60%
USD JOLTS Job Openings 5.30M 5.38M
USD IBD/TIPP Economic Optimism 48.9 48.1
02:01 GBP BRC Shop Price Index y/y -1.90%
08-Jul 02:50 JPY Current Account 1.38T 1.27T
JPY Bank Lending y/y 2.60%
08:00 JPY Economy Watchers Sentiment 53.2 53.3
12:30 GBP FPC Meeting Minutes
14:30 GBP Annual Budget Release
15:30 CAD Building Permits m/m 11.60%
17:30 USD Crude Oil Inventories 2.4M
20:01 USD 10-y Bond Auction 2.46|2.7
21:00 USD FOMC Meeting Minutes
USD FOMC Member Williams Speaks
22:00 USD Consumer Credit m/m 18.6B 20.5B
02:01 GBP RICS House Price Balance 37% 34%
09-Jul 02:50 JPY Core Machinery Orders m/m -4.60% 3.80%
JPY M2 Money Stock y/y 4.00% 4.00%
04:30 AUD Employment Change 0.1K 42.0K
AUD Unemployment Rate 6.10% 6.00%
CNY CPI y/y 1.30% 1.20%
CNY PPI y/y -4.60% -4.60%
06:45 JPY 30-y Bond Auction 1.53|3.1
09:00 EUR German Trade Balance 20.6B 22.3B
JPY Prelim Machine Tool Orders y/y 15.00%
14:00 GBP Official Bank Rate 0.50% 0.50%
GBP Asset Purchase Facility 375B 375B
Tentative GBP MPC Rate Statement
15:15 CAD Housing Starts 191K 202K
15:30 CAD NHPI m/m 0.20% 0.10%
USD Unemployment Claims 277K 281K
17:15 USD FOMC Member Brainard Speaks
17:30 USD Natural Gas Storage 69B
20:01 USD 30-y Bond Auction 3.14|2.5
02:50 JPY PPI y/y -2.20% -2.10%
10-Jul 04:30 AUD Home Loans m/m -2.80% 1.00%
08:00 JPY Consumer Confidence 41.9 41.4
09:45 EUR French Industrial Production m/m 0.50% -0.90%
10th-13th CNY New Loans 901B
10th-13th CNY M2 Money Supply y/y 10.80%
11:00 EUR Italian Industrial Production m/m 0.30% -0.30%
11:30 GBP Trade Balance -9.7B -8.6B
GBP Construction Output m/m 0.70% -0.80%
15:30 CAD Employment Change -4.5K 58.9K
CAD Unemployment Rate 6.90% 6.80%
17:00 USD Wholesale Inventories m/m 0.30% 0.40%
19:30 USD Fed Chair Yellen Speaks

 

Currencies/Events to Watch this Week

RBA Monetary Policy & Jobs Report: The start of the new month see’s the RBA meet for its monthly monetary policy. Expectations are for the Central bank to keep interest rates steady at 2%. The Aussie has been relatively subdued since last month and a weaker pace of growth during the month could see the RBA strike a dovish tone in the markets. On tap is the June employment report from Australia and expectations are for the unemployment rate to increase by a notch to 6.1%.

Canada Jobs and Housing data: Last week was slow for the Canadian dollar with only the GDP data for the month being released. The week ahead will see some important data including the Ivey PMI and building permits. The Canadian jobs report is also due later on Friday and expectations are for the Canadian unemployment rate to increase to 6.9%, which could turn the sentiment even more bearish for the Canadian dollar.

Greece Referendum: There are quite a few economic releases from Eurozone next week but it is unlikely that the Single currency would react much to the data. Focus however will be how the Greece debt negotiations will continue after the Greeks voted ‘No’ to austerity. The Single currency is likely to come under increasing pressure in the near term.

BoE Rate Statement: The Bank of England has been quiet in recent months with economic data from the UK slowly turning higher. However, few weeks ago, Mark Carney ruled out rate hikes in the near term. The markets are pricing in a rate hike from the BoE in 2016, but that could change should the MPC members start to move to the hawkish camp. Overall, June’s BoE meeting minutes are unlikely to bring any major changes to the UK’s monetary policy.

FOMC Minutes & Yellen Speech: The week ahead will see more data from the US with the services and non-manufacturing PMI data on the tap. The markets could however shift focus to the FOMC meeting minutes due on the 8th of July (Wednesday) and follow up with Fed Chair, Janet Yellen’s speech on Friday.

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