Last week, the U.S. dollar suffered following Fed Chair Powell’s signal about an interest rate cut in July. However, the greenback recovered gradually because of rising inflation. Jerome Powell said that there is a weakening of the outlook and that many members are in favor of a rate cut. Further, investment has slowed down notably and the weakness in inflation is likely to persist. Powell’s dovish words have raised the possibility of a cut in interest rates during the month. However, the greenback recovered towards the close of the week because of upbeat core inflation which came in at an annualized rate of 2.1 percent.
Where is the U.S. dollar headed now? In the upcoming week, the U.S. consumer will be in the spotlight. Prior to the Fed’s decision, retail sales and consumer confidence numbers are set to be released. Having said that here is an outlook on some of the key releases scheduled for the next week:
#1: China GDP (07/15/2019 Monday 02:00 GMT)
China’s GDP advanced 6.4 percent on a year-on-year basis in the first quarter of this year at the same rate as in the prior quarter. However, the reading for the quarter came in slightly above analysts’ expectations for a 6.3 percent growth. There was a marked increase in the growth of industrial output and strengthening of consumer demand amid the pro-growth policies of the government. This helped in stabilizing sentiments that were impacted by the trade issues with the U.S. The economy expanded 1.4 percent sequentially in the March quarter. In the previous quarter, GDP had expanded by 1.5 percent. Forecast for the second quarter of 2019: 6.2 percent
#2: New Zealand CPI (07/15/2019 Monday 22:45 GMT)
In New Zealand, consumer prices rose by 0.1 percent on a quarter-on-quarter basis in the March quarter of this year, unchanged from the reading for the prior period. However, the reading for the quarter was below analysts’ expectations of 0.3 percent. Forecast for the second quarter of 2019: 0.6 percent
#3: Australia RBA Monetary Policy Meeting Minutes (07/16/2019 Tuesday 01:30 GMT)
The Reserve Bank of Australia releases the Monetary Policy Meeting Minutes 11 times in a year two weeks after the announcement of the Cash Rate. It provides a detailed account of the most recent meeting of the Reserve Bank Board. It also provides in-depth insight as regards the economic conditions that impacted their decision on setting interest rates.
#4: U.K. Average Earnings Index (07/16/2019 Tuesday 8:30 GMT)
The total earnings of workers in the U.K., including bonuses, increased by 3.1 percent on an annualized basis during the three-month period to April, down from the previous month’s upwardly revised reading of 3.3 percent gain. However, the reading for period beat analysts’ expectations for a 3.0 percent gain. This was the weakest increase in wages ever since the three-month period to September 2018. Growth in wages eased in the private, services, finance and business services, manufacturing, wholesale, retail, hotels, and restaurant sectors. However, wages increased further in the construction and public sectors. Excluding bonuses, earnings rose 3.4 percent, following the 3.3 percent increase in the prior period. The reading also came in above analysts’ expectations of 3.1 percent. In real terms, wages including bonuses rose by 1.2 percent and that excluding bonuses advanced by 1.5 percent. Forecast for the three-month period to May 2019: 3.1 percent
#5: U.S. Retail Sales and Core Retail Sales (07/16/2019 Tuesday 12:30 GMT)
In the U.S., retail trade increased by 0.5 percent on a month-on-month basis in May after the reading for the prior month was revised upward to a 0.3 percent gain. Analysts had expected retail sales to increase by 0.6 percent. Sales of motor vehicles and several other goods increased. Core retail trade, which excludes autos, rose by 0.5 percent after the reading for the prior month was revised upward to 0.5 percent. Analysts had expected core retail sales to increase by 0.3 percent. Forecast for June 2019: retail sales and core retail sales are expected to increase by 0.2 percent and 0.1 percent respectively
#6: U.S. Fed Chair Jerome Powell Speaks (07/16/2019 Tuesday 17:00 GMT)
Jerome Powell, Federal Reserve Chair, is scheduled to deliver a talk on “Aspects of Monetary Policy in the Post-Crisis Era” in Paris at the French G7 Presidency meeting 2019. Markets often remain volatile during his speeches as traders make an attempt to understand the direction of interest rates.
#7: U.S. FOMC Member Charles Evans Speaks (07/16/2019 Tuesday 19:30 GMT)
Charles Evans, U.S. FOMC Member, speaks in a television program on CNBC. Audience questions expected. The members vote on the interest rate and use their public engagements to drop clues on future monetary policy decisions.
#8: U.K. CPI (07/17/2019 Wednesday 08:30 GMT)
In the United Kingdom, inflation declined to 2.0 percent on a year-on-year basis in May from the four-month high level of 2.1 percent reported in the prior month. The reading for May was in line with analysts’ expectations. Core inflation, which excludes energy, alcohol, food, and tobacco, fell to the 1.7 percent level, the lowest annual rate level ever since January 2017. Forecast for June 2019: 2.00 percent
#9: Canada CPI (07/17/2019 Wednesday 12:30 GMT)
In Canada, consumer prices increased 0.40 percent in the month of May on a month-on-month basis. Forecast for June 2019: consumer prices are expected to decline by 0.3 percent.
#10: Australia Employment Change and Unemployment Rate (07/18/2019 Thursday 01:30 GMT)
In Australia, employment increased by 42,300 in May, much more than the 28,400 job additions in the prior month and analysts’ expectations for an increase of 17,500. This was the highest monthly increase ever since August 2018. The employment growth was driven by part-time employment. Only 2,400 full-time jobs were added.
On a seasonally adjusted basis, the unemployment rate came in at 5.2 percent in the month of May, the same as eighth month-high reading reported last month. Analysts expected unemployment to come in at 5.1 percent.
Forecast for June 2019: Australia is expected to add 9,100 jobs and maintain the unemployment level at 5.2 percent
#11: U.K. Retail Sales (07/18/2019 Thursday 08:30 GMT)
In the U.K., retail trade fell 0.5 percent on a month-on-month basis in May after the reading for the prior month was revised downward to a 0.1 percent decline. The reading for May matched analysts’ expectations. Retail trade declined for the second month in a row. Further, this is the steepest decline ever since December last year as fuel and non-food stores sales fell. Forecast for June 2019: -0.3 percent
#12: Canada Core Retail Sales (07/19/2019 Friday 12:30 GMT)
In Canada, core retail trade came in at 0.10 percent in the month of April from 1.80 percent in the previous month. Forecast for June 2019: an increase of 0.2 percent is on the cards