FX Week Ahead: BoE, FOMC and BoJ meetings

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The economic calendar for the week ahead is a busy one with lots of reports coming out during the latter part of the week. Among the high ticket events, the FOMC is expected to meet this week.

No changes are expected to the monetary policy but investors will be clued into the Fed’s statement as the markets expect the next rate hike due in September. The Bank of Japan will also be holding its meeting this week.

On the economic front, the Eurozone will be releasing the flash inflation estimates for July. Following the decline in the core inflation rate in June, traders will be looking to see any uptick in the report. Canada will be releasing the monthly GDP figures this week while data from New Zealand will cover the quarterly employment report.

The Bank of England will be holding its monetary policy meeting this week where expectations are for an interest rate hike. The BoE will also be releasing its inflation outlook report ahead of the interest rate decision.

Here’s a quick recap of the economic events for the week ahead.

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Busy week for the USD: FOMC meeting, Nonfarm payrolls and ISM

Economic data from the United States for the week ahead will pick up steam once the markets step into a new trading month. Friday’s payrolls report will be on the top of agenda. The U.S. economy is forecast to add 195k jobs during the month of July. The forecasts are slightly lower than June’s headline print of 213k.

The unemployment rate is expected to tick back lower to 3.9% after rising to 4.0% the month before. The uptick in the employment rate came amid higher participation rate.

Wage growth, which remains an important aspect of the jobs report is forecast to rise 0.3% on the month. This would mark a stronger increase in wages on a monthly basis after wages increased 0.2% the month before.

The ISM’s manufacturing reports are also due this week. The ISM’s manufacturing PMI is expected to ease to 59.1 for July after the index touched 60.2 in the month before. Non-manufacturing PMI is forecast to rise to 58.8 on the index for July. This marks a slight decline from 59.1 registered the month before.

The Fed’s interest rate decision is also due this week on Wednesday. No changes are expected as the central bank is expected to hold rates steady. However, the markets expect the Fed to signal a hawkish forward guidance ahead of the well anticipated rate hike due in September.

Bank of England to hike interest rates

The Bank of England will be holding its monetary policy meeting this week. After missing the window at the May monetary policy meeting for a rate hike, investors are anticipating a second rate hike from the Bank of England this week.

The Bank of England’s monetary policy meeting comes as the economy shows a sign of rebounding from the slump in the first quarter. However, doubts remain as recent inflation data showed that consumer prices stayed broadly unchanged from the month before.

However, with inflation still above the Bank of England’s 2.0% inflation target rate and a modest uptick in the wage growth, the central bank could be seen pushing with a rate hike this week. Given the fact that there were two dissenting votes at the previous meeting, the prospects for a rate hike are higher, heading into this week’s event.

Besides the monetary policy decision, the other economic data over the week includes the monthly manufacturing, services and construction PMI figures that will be released. Activity in the sectors is expected to rise modestly in the month of July.

 

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