After closing the week before as the top performing currency, the US dollar fell against its peers turning out to be the weakest currency for the week ending July 29. The dollar turned weaker after the FOMC statement failed to convince investors on a September rate hike and the declines strengthened following the BoJ policy meeting and weak GDP data on Friday.
The Japanese yen was obviously the top currency last week, gaining over 3.0% against the dollar. The Bank of Japan failed to live up to market expectations despite expanding its ETF purchases; the yen rose sharply on Friday erasing its losses from the previous week. Gold also rallied during the week with gains of nearly 2.15%, while the New Zealand dollar which has been posting a steady decline a week ago managed to recover quite strongly.
Economic Calendar for the Week 01/08 – 05/08
|01-Aug||02:00||AUD||MI Inflation Gauge m/m||0.60%|
|02:15||USD||FOMC Member Dudley Speaks|
|02:45||CNY||Caixin Manufacturing PMI||48.8||48.6|
|03:00||JPY||Final Manufacturing PMI||49||49|
|08:15||EUR||Spanish Manufacturing PMI||51.6||52.2|
|08:45||EUR||Italian Manufacturing PMI||52.5||53.5|
|08:50||EUR||French Final Manufacturing PMI||48.6||48.6|
|08:55||EUR||German Final Manufacturing PMI||53.7||53.7|
|09:00||EUR||Final Manufacturing PMI||51.9||51.9|
|14:45||USD||Final Manufacturing PMI||52.9||52.9|
|15:00||USD||ISM Manufacturing PMI||53.1||53.2|
|USD||Construction Spending m/m||0.50%||-0.80%|
|USD||ISM Manufacturing Prices||61||60.5|
|02-Aug||00:50||JPY||Monetary Base y/y||24.30%||25.40%|
|02:30||AUD||Building Approvals m/m||0.90%||-5.20%|
|04:00||NZD||Inflation Expectations q/q||1.60%|
|AUD||RBA Rate Statement|
|08:15||CHF||Retail Sales y/y||-2.00%||-1.60%|
|13:30||USD||Core PCE Price Index m/m||0.10%||0.20%|
|USD||Personal Spending m/m||0.30%||0.40%|
|USD||Personal Income m/m||0.30%||0.20%|
|23:45||NZD||Labor Cost Index q/q||0.40%||0.40%|
|03-Aug||00:50||JPY||Monetary Policy Meeting Minutes|
|02:45||CNY||Caixin Services PMI||52.9||52.7|
|08:15||EUR||Spanish Services PMI||55.1||56|
|08:45||EUR||Italian Services PMI||51.1||51.9|
|08:50||EUR||French Final Services PMI||50.3||50.3|
|08:55||EUR||German Final Services PMI||54.6||54.6|
|09:00||EUR||Final Services PMI||52.8||52.7|
|10:00||EUR||Retail Sales m/m||0.00%||0.40%|
|13:15||USD||ADP Non-Farm Employment Change||171K||172K|
|14:45||USD||Final Services PMI||51||50.9|
|15:00||USD||ISM Non-Manufacturing PMI||56||56.5|
|04-Aug||02:30||AUD||Retail Sales m/m||0.30%||0.20%|
|09:00||EUR||ECB Economic Bulletin|
|12:00||GBP||BOE Inflation Report|
|GBP||MPC Official Bank Rate Votes||0-9-0||0-1-8|
|GBP||Monetary Policy Summary|
|GBP||Official Bank Rate||0.25%||0.50%|
|GBP||Asset Purchase Facility||375B||375B|
|GBP||MPC Asset Purchase Facility Votes||0-0-9||0-0-9|
|12:30||GBP||BOE Gov Carney Speaks|
|15:00||USD||Factory Orders m/m||-1.80%||-1.00%|
|05-Aug||01:00||JPY||Average Cash Earnings y/y||0.40%||-0.10%|
|02:30||AUD||RBA Monetary Policy Statement|
|07:00||EUR||German Factory Orders m/m||0.50%||0.00%|
|07:45||EUR||French Trade Balance||-3.9B||-2.8B|
|USD||Average Hourly Earnings m/m||0.20%||0.10%|
|USD||Non-Farm Employment Change||180K||287K|
|20:00||USD||Consumer Credit m/m||15.5B||18.6B|
Currencies/Events to Watch this Week
AUD: The main focus for the Australian dollar next week will be the RBA meeting due on August 2. Median forecasts call for a 25bps rate cut, effectively taking the RBA’s cash rate to 1.50% from the current 1.75%. The RBA had previously cut interest rates in May this year. A rather soft inflation print released last week has stoked expectations for the RBA’s dovish stand. However, the markets could be at risk here as the August meeting marks the final policy meeting of Governor Glenn Stevens, which could mean that monetary policy could remain unchanged as he hands over the reins of the RBA to the new Governor Philip Lowe. On Friday, the RBA will be releasing its quarterly forecasts which could see some more downside revisions to the inflation outlook.
NZD: From New Zealand, the quarterly inflation expectations will be the main event that could set the tone for the RBNZ’s policy stance. Inflation expectations have remained anchored to 1.60% for the past two-quarters. Later in the week, the quarterly labor market data is expected to show the quarterly unemployment rate which increased to 5.70% in the first three months of the year is expected to remain unchanged.
JPY: Following the Bank of Japan’s meeting on Friday, the markets will be looking to a slow week as far as economic releases are concerned. On Monday, the final manufacturing PMI number will be out and later on August 3rd, the monetary policy meeting minutes will be released. On Tuesday, August 2, Prime Minister Shinzo Abe is expected to announce more details on the proposed ¥28 trillion fiscal stimulus plan, which could keep the yen crosses volatile.
EUR: From the Eurozone, the start of a new trading month puts the focus on the PMI surveys from Germany and France and the Eurozone as a whole. Producer prices index will be released on Tuesday and follow the increase to 0.60% in June; expectations call for the PPI to moderate to a 0.40% increase. Economic data is more or less light from the Eurozone with no other major events scheduled with the exception of the PMI surveys.
GBP: A very busy and an important week for the British pound. The monthly PMI surveys will be closely watched as the flash survey released previously by Markit showed that manufacturing and services PMI both fell into contraction in July. On Thursday, the Bank of England’s meeting is due with expectations riding high that the central bank will cut interest rates by 25bps and BoE Governor; Mark Carney will be speaking to the press later in the day.
CAD: A slow week for the Canadian dollar with only Friday seeing the release of the monthly employment data and trade balance. The Canadian economy lost 0.7k jobs in June while the unemployment rate fell to 6.80%, falling for three straight months. For July, market consensus points to at the unemployment rate rising to 6.90%, while the economy is expected to add 9k jobs during the month.
USD: Economic data from the US is packed this week. On Monday, the ISM manufacturing PMI will be the main focus including construction spending. Following the increase in ISM manufacturing PMI to 53.2 in June, expectations call for 53.1 in July. On Wednesday, August 3, the ADP private payrolls data is expected to showing that private employers added 170k jobs in July, following the 172k print in June and eventually, set the stage for the nonfarm payrolls data due on Friday. After beating estimates and rising 287k, expectations for July are pointing to modest 181k jobs. Focus will be on how big a revision for June jobs data. The unemployment rate, which stood at 4.90% a month ago is expected to fall to 4.80% while average hourly earnings are expected to rise 0.20% from June.