Last week, the U.S. dollar lost further ground against a host of other currencies as a result of the less hawkish stance taken by the Fed and because of the failure on the part of the Trump administration to repeal and replace Obamacare. The EUR/USD rose to 1.1777, the highest level in two and a half years. The U.S. dollar which has been on a downward trend in the recent weeks has lost as much as 10.2 percent and has hit a fresh one year low after setting a new 14-year high on the second trading day in 2017.
In the near term, the prospects for the U.S. dollar remain clouded as the latest machinations of Trump may only contribute to increasing political uncertainty. However, business and confidence are elevated, the economic indicators better, and the labor market is continuing to tighten. Further, the political uncertainty has not had a significant impact on growth. Therefore, the U.S. dollar is likely to recover in the next six to 12 months’ time.
Having said this, here is an outlook on the releases scheduled for the coming week:
#1: Australia Cash Rate (08/01/2017 Tuesday 4:30 GMT)
In the July 4 monetary policy meeting, the Reserve Bank of Australia decided to maintain the cash rate at the current level (record low) of 1.5 percent. This was widely expected by the market. During the meeting, the policymakers said that the slowdown in GDP in the first quarter was temporary and that the economy would become stronger gradually because of the shift to lower levels of investment mining sector, following the completion of the mining investment boom. Forecast for August: 1.5 percent
#2: Reserve Bank of Australia Rate Statement (08/01/2017 Tuesday 4:30 GMT)
The Reserve Bank of Australia’s Board uses the rate statement as a tool to inform the investors about monetary policy decisions. It provides the outcome of the board’s decision on setting interest rates and a commentary on the economic conditions that impacted its decision. More importantly, the statement discusses the country’s economic outlook and provides clues on future decisions.
#3: U.K. Manufacturing PMI (08/01/2017 Tuesday 8:30 GMT)
On a seasonally adjusted basis, the IHS Markit/CIPS Manufacturing PMI dipped to 54.3 in June, after the reading for May was revised downward to 56.3, way below the analysts’ consensus of 56.5. This represented the weakest pace of growth in the sector since March. New business growth was slower in both the domestic and export markets. Further, output and employment growth eased. Additionally, the rate of increase in output charges and input costs declined further. Forecast for July: 54.5
#4: U.S. ISM Manufacturing PMI (08/01/2017 Tuesday 14:00 GMT)
In June, the Manufacturing PMI reported by the Institute for Supply Management rose to 57.8 from 54.9 in the previous month. The reading came in much above analysts’ expectation for a reading of 55.2, pointing to the largest rate of expansion since August 2014. Output, employment, and new orders grew at a faster pace. Forecast for July: 56.4
#5: New Zealand Employment Change (08/01/2017 Tuesday 22:45 GMT)
In the first quarter of this year, employment in New Zealand grew by 1.20 percent after it increased by 0.8 percent in the previous quarter. Forecast for the second quarter of this year: increase of 0.7 percent
#6: New Zealand Unemployment Rate (08/01/2017 Tuesday 22:45 GMT)
The unemployment rate in New Zealand declined to 4.9 percent in the March quarter from 5.2 percent in the final quarter of last year. The reading for the first quarter came in below analysts’ expectations that the unemployment rate will be 5.2 percent in the first quarter of this year. This is the lowest rate in as many as six months. The number of unemployed people in New Zealand fell by 4.4 percent on a quarter-over-quarter basis. Meanwhile, the labor force participation rate rose to 70.6 percent, an all-time high. Forecast for second quarter: 4.8 percent
#7: U.K. Construction PMI (08/02/2017 Wednesday 8:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI declined to 54.8 in June from 56 in the previous month. This was the highest reading since December 2015. However, the reading came in slightly below analysts’ estimate of 55. Business activity, employment, and new work expanded at a slower pace as risk aversion became higher among clients. This reflected concerns as regards the country’s political uncertainty and economic outlook. Additionally, construction companies were least optimistic about growth prospects in the near term since December 2016. Forecast for July: 54.2
#8: U.S. ADP Non-Farm Employment Change (08/02/2017 Wednesday 12:15 GMT)
In the U.S., private businesses hired 158,000 workers in June after the reading for the previous month was revised downward to 230,000. The reading for June came in below analysts’ expectation of 185,000. Forecast for July: 187,000
#9: U.S. Crude Oil Stocks Change (08/02/2017 Wednesday 14:30 GMT)
In the U.S., crude oil stocks dropped by 7.208 million barrels during the week that ended on July 21, following the 4.727 million barrels drop recorded in the previous week. The drop in crude oil stocks in June was much higher than analysts’ expectation of a decline of 2.629 million barrels. Gasoline stocks fell by 1.015 million barrels against market expectation for a decline of 0.614 million barrels. Forecast for the next week: 1.4 million barrels decline
#10: Australia Trade Balance (08/03/2017 Thursday 1:30 GMT)
In Australia, trade surplus widened by 2.6 percent to A$2.47 billion in the month of May from the reading for April which was revised downward to A$0.09 billion. The figure for May beat analysts’ estimate of A$1.1 billion trade surplus. With this Australia has recorded trade surplus for seven straight months. Further, this is the largest increase since February 2017. On a month-on-month basis, exports jumped 9 percent to A$32.78 billion, while imports increased 1 percent to A$30.31 billion. Forecast for June: A$1.77 billion
#11: U.K. Services PMI (08/03/2017 Thursday 8:30 GMT)
On a seasonally adjusted basis, the headline IHS Markit/CIPS Services PMI dropped to 53.4 in June from 53.8 in the previous month. The reading for June came in slightly below the market expectation of 53.5 and indicated the weakest pace of growth since February. New work growth was at a nine-month low and business sentiment for the year ahead was at the weakest level since July 2016. Forecast for July: 53.7
#12: U.K. Bank of England Inflation Report (08/03/2017 Thursday 11:00 GMT)
The Bank of England’s quarterly inflation report provides the central bank’s projection of economic growth and inflation rate increase over the next two years. The governor of the Bank of England also holds a press conference in order to discuss the contents of the report following the release. Traders look for clues on the direction of interest rate in the future.
#13: U.K. Official Bank Rate/Bank of England Monetary Policy Committee Official Bank Rate Votes (08/03/2017 Thursday 11:00 GMT)
The Bank of England’s monetary policy committee members voted by 3-0-5 for keeping the interest rate at the record low level of 0.25 percent during the meeting on June 15 as was widely expected. This is because policymakers expressed concerns over the rising inflation, slow pace of pay growth, household spending, and GDP. Further, the Committee unanimously voted for maintaining the stock of Sterling non-financial investment-grade corporate bond purchases at £10 billion and the stock of U.K. government bond purchases at £435 billion. Forecast for August: interest rate 0.25 percent; votes 3-0-5
#14: U.K. Bank of England Monetary Policy Summary (08/03/2017 Thursday 11:00 GMT)
Released on a monthly basis, the monetary policy summary report is one of the tools of the Committee to inform investors as regards the monetary policy. In addition to the members’ vote, it contains a commentary on the prevailing economic conditions that impacted their decision. More importantly, the report provides the country’s economic outlook and clues on the direction of interest rates in the future.
#15: U.K. Bank of England Governor Mark Carney Speaks (08/03/2017 Thursday 11:30 GMT)
Mark Carney, the governor of Bank of England, is scheduled to participate in a press conference on Inflation Report in London, along with other MPC members. Markets often remain volatile during his speeches.
#16: U.S. Unemployment Claims (08/03/2017 Thursday 12:30 GMT)
In the U.S., the number of people filing for jobless benefits rose by 10,000 to 244,000 during the that ended on July 22 after the previous week’s reading revised to 234,000 claims. Analysts had expected that 241,000 claims would be reported. The four-week moving average, which eliminates weekly volatility, remained unchanged at 244,000. Forecast for the next reporting period: 242,000
#17: U.S. ISM Non-Manufacturing PMI (08/03/2017 Thursday 14:00 GMT)
The ISM Non-Manufacturing PMI came in at 57.4 in June, up from 56.9 in the previous month. The reading for the month beat market expectation of 56.5. While new orders and business activity improved, employment slowed down. The comments of a majority of the respondents on the overall economy and business conditions were positive. Forecast for the month of July: 56.9
#18: Reserve Bank of Australia’s Monetary Policy Statement (08/04/2017 Friday 1:30 GMT)
#19: Australia Retail Sales (08/04/2017 Friday 1:30 GMT)
In Australia, retail sales increased by 0.6 percent in May from the previous month. In April, retail sales rose by 1 percent on a monthly basis. The reading for May came in above analysts’ estimate for an increase of 0.2 percent. Sales increased in the food sector (restaurants, cafes, and takeaway food services), while that in department stores declined. Forecast for June: 0.2 percent
#20: Canada Employment Change/Unemployment Rate (08/04/2017 Friday 12:30 GMT)
IIn Canada, employment rose by 45,300 in the month of June, down from 54,500 reported in the previous month. However, the reading came in above analysts’ expectation of 10,000 numbers. While part-time employment expanded by 37,100 numbers, full-time employment rose only by 8,100 numbers. Forecast for July: 14,600
In June, Canada’s unemployment rate declined to 6.5 percent from 6.6 percent in May. The reading for June came in below analysts’ expectation of 6.6 percent. Forecast for July: 6.5 percent
#21: Canada Trade Balance (08/04/2017 Friday 12:30 GMT)
Canada´s trade deficit rose to C$1.08 billion in the month of May after the reading for April was revised upward to a deficit of C$0.55 billion. The reading came in worse than analysts’ expectation for a deficit of C$0.53 billion. Exports rose 1.3 percent because of an increase in sales of motor vehicles and spare parts and metal as well as non-metallic mineral products. On the other hand, imports increased at a faster pace of 2.4 percent, driven by the increase in aircraft purchases. Forecast for June: deficit of C$1.4 billion
#22: U.S. Average Hourly Earnings (08/04/2017 Friday 12:30 GMT)
In the U.S., the average hourly earnings of all employees on private nonfarm payrolls increased by 0.2 percent, or 4 cents, to $26.25 in the month of June after registering a 0.1 percent rise in the previous month. In June, the average hourly earnings came in below analysts’ expectation for a 0.3 percent increase. Forecast for July: 0.3 percent increase
#23: U.S. Non-Farm Employment Change (08/04/2017 Friday 12:30 GMT)
In the U.S., non-farm employment rose by 222,000 in June after the increase for the prior month was revised upward to 152,000 in May. The reading for the month of June came in above the market expectation of 179,000. This is the highest reading in four months. Forecast for
#24: U.S. Unemployment Rate (08/04/2017 Friday 12:30 GMT)
In the U.S., the unemployment rate rose to 4.40 percent in the month of June from 4.30 percent in the previous month. Forecast for July: 4.3 percent