Forex Market Outlook For The Week July 20 – 24, 2020

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The coronavirus pandemic is expected to continue to dominate the headlines amid the second-quarter earnings season. In the upcoming week, IBM, Microsoft, Twitter, and Tesla are scheduled to report their results. The PMI data from France and Germany and retail sales figures from Canada are some of the key releases scheduled for the week. Having said that here is an outlook on a few releases that are likely to create some movement in the currency market:

#1: Australia RBA Governor Philip Lowe Speaks (07/21/2020 Tuesday 02:30 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to deliver a speech on the topic “Covid-19: The Labor Market and Public-sector Balance Sheets” via satellite at the Anika Foundation Luncheon. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#2: Canada Core Retail Sales (07/21/2020 Tuesday 12:30 GMT)

forex market outlookIn Canada, core retail sales, which exclude autos, fell 22.0 percent in April, following the 0.20 percent decline in March.

#3: France Flash Services PMI (07/24/2020 Friday 07:15 GMT)

Tin France, the Services PMI reported by IHS Markit was revised upward to the 50.7 level in June from the preliminary estimate of 50.3. This signaled a slight recovery in output, following sharp reductions registered in the previous three months because of the coronavirus pandemic. Employment and new business fell at a softer pace. Firms reported that clients were hesitant to approve new projects in the wake of the possibility of a second wave of coronavirus infections. Input costs rose for the first time in as many as three months because of the demand for protective equipment. Output charges, however, continued to decline as firms made an effort to boost sales. Service providers expressed optimism about a rebound in demand as restrictions were continually being eased.

Forecast for July 2020: 52.3

#4: Germany Flash Manufacturing PMI (07/24/2020 Friday 07:30 GMT)

In Germany, the Manufacturing PMI reported by IHS Markit/BME was revised upward to the 45.2 level in June from the preliminary estimate of 44.6. The reading for the month came in above May’s reading of 36.6. New orders and output declined at a slower rate as more and more businesses started ramping up operations after remaining closed for many weeks due to the Covid-19 pandemic.

Forecast for July 2020: 48.0

#5: Germany Flash Services PMI (07/24/2020 Friday 07:30 GMT)

In Germany, the Services PMI reported by IHS Markit was revised upward to the 47.3 level in June from the preliminary reading of 45.8. In May, the index stood at the 32.6 level. The reading, however, still pointed towards a contraction within the services sector because of a lack of demand. However, there was some evidence that activity was gradually increasing in the sectors that were shut down, especially in the hotels and restaurants sector. The inflow of new business remained low across the service sector for the fourth consecutive month. According to firms, this was due to hesitancy among clients. The export business remained weak because of travel restrictions. Job cuts continued but the job loss was the weakest in the four-month period. Business sentiment moved into positive territory for the very first time since February amid growing hopes that the conditions will become normal over the next 12 months.

Forecast for July 2020: 50.2

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