FX Week Ahead: It’s All About US Jobs

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The British pound lost another 3.30% over the week, marking the second week of declines. The week before, the pound was down by over 4%. The markets remained mixed with a modest risk on rally. The Kiwi gained 0.72% as a result while the Canadian dollar also managed to keep its gains, following a modestly upbeat GDP numbers for April. The risk on sentiment saw yen giving back its gains, falling 0.26% on the week, relative to the US dollar.

Weekly Spot FX Performance – 01/06/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 01/06/2016 (Source: Finviz.com)

On the economic front, the US Q1 GDP numbers were revised higher reflecting a 1.10% quarter over quarter GDP growth, compared to the second estimates which showed a 0.80% increase. In the UK, the first quarter GDP was confirmed at 0.40%. However, the sterling focused on the Brexit developments with economic data taking a back seat.

Economic Calendar for the Week 27/06 – 01/07

Date Time Currency Detail Forecast Previous
05-Jul 02:45 CNY Caixin Services PMI 52.3 51.2
08:15 EUR Spanish Services PMI 55.2 55.4
08:45 EUR Italian Services PMI 50.3 49.8
08:50 EUR French Final Services PMI 49.9 49.9
08:55 EUR German Final Services PMI 53.2 53.2
09:00 EUR Final Services PMI 52.5 52.4
09:30 GBP Services PMI 53.1 53.5
10:00 EUR Retail Sales m/m 0.60% 0.00%
10:30 GBP BOE Gov Carney Speaks
GBP BOE Financial Stability Report
15:00 USD Factory Orders m/m -0.70% 1.90%
USD IBD/TIPP Economic Optimism 49.3 48.2
19:30 USD FOMC Member Dudley Speaks
06-Jul 07:00 EUR German Factory Orders m/m 1.10% -2.00%
09:30 GBP Housing Equity Withdrawal q/q -10.1B -9.5B
13:30 CAD Trade Balance -2.7B -2.9B
USD Trade Balance -40.0B -37.4B
14:45 USD Final Services PMI 51.5 51.3
15:00 USD ISM Non-Manufacturing PMI 53.5 52.9
19:00 USD FOMC Meeting Minutes
07-Jul 07:00 EUR German Industrial Production m/m 0.10% 0.80%
07:45 EUR French Trade Balance -4.8B -5.2B
08:00 CHF Foreign Currency Reserves 602B
08:15 CHF CPI m/m 0.10% 0.10%
08:30 GBP Halifax HPI m/m 0.40% 0.60%
09:30 GBP Manufacturing Production m/m -1.40% 2.30%
GBP Industrial Production m/m -1.00% 2.00%
12:30 EUR ECB Monetary Policy Meeting Accounts
13:15 USD ADP Non-Farm Employment Change 151K 173K
13:30 CAD Building Permits m/m 2.10% -0.30%
USD Unemployment Claims 272K 268K
15:00 CAD Ivey PMI 50.2 49.4
08-Jul 06:45 CHF Unemployment Rate 3.50% 3.50%
07:00 EUR German Trade Balance 22.3B 24.0B
EUR French Industrial Production m/m -0.40% 1.20%
09:30 GBP Goods Trade Balance -10.2B -10.5B
13:30 CAD Employment Change 6.9K 13.8K
CAD Unemployment Rate 7.00% 6.90%
USD Average Hourly Earnings m/m 0.20% 0.20%
USD Non-Farm Employment Change 181K 38K
USD Unemployment Rate 4.80% 4.70%
20:00 USD Consumer Credit m/m 17.3B 13.4B

Time: GMT+1

Currencies/Events to Watch this Week

AUD: On the economic front, data from Australia will include building approvals data which is forecast to fall 3.0% on the month in May. Last week Australia’s new home sales fell for the second month as data from HIA showed a 4.40% decline. Retail sales are also on the tap next week, expected to rise at a pace of 0.20%, same as the month before in April. On Tuesday, the RBA meets for its monetary policy meeting, which is unlikely to see any rate cuts. More importantly, markets will focus on the RBA’s assessment of the Brexit outcome in terms of the economic impact on Australia.

CNY: Data from China over the week starts with Caixin services PMI, forecast to rise to 52.3 in June, following 51.2 in May. China’s forex reserves are also expected during the week followed by inflation data next Sunday.

JPY: A slow week for the yen, BoJ’s Kuroda is expected to speak on Thursday, 7th July. On the economic front, not many releases are scheduled with only the current account data and trade balance numbers coming out on the day. The yen is thus likely to seek direction from the dollar and the general market sentiment.

EUR: Eurozone services PMI’s are up next week with the final services PMI forecast to remain unchanged at 52.4. Producer price index is also expected during the week, forecast to show an increase of 0.20% in May, following April’s 0.30% declines. On a year over year, Eurozone PPI is estimated to have fallen 4.0%. Retail sales in the Eurozone are expected to show a pickup, rising 0.30% on a month over month basis. Data from Germany and France include factory orders and industrial production data for the month of May.

GBP: Economic data from the UK is packed with trade balance numbers due on Friday while the remainder of the week will see the construction and services PMI numbers coming out. On Tuesday, BoE’s Carney will be speaking after the central bank will release the financial stability report. Industrial and manufacturing production data for May is expected to show moderation, rising 1.0% and 0.80% on a year over year basis, respectively.

CAD: Canada will be looking at the monthly jobs report for June. A volatile print in recent times, forecasts call for the unemployment rate to have increased to 7.0% while the net employment change is expected to show 6.6k jobs being added on the month. Building permits are expected to rise 1.90% on the month in May.

USD: Short week for the US, which is closed on July 4th Independence Day celebrations. Data over the week includes ADP payrolls reports on Thursday which is forecast to show 150k jobs being added on the month. This is followed by Friday’s nonfarm payrolls report which is expected to show that the US economy added 179k jobs on average during June. The unemployment rate is expected to rise back to 4.80%. FOMC meeting minutes will be released on Tuesday, which will also see various Fed members speaking.

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