Turbulence and uncertainty continued in the financial markets last week. The USD strengthened against the Euro, Pound, Canadian dollar and Swiss franc, but declined against the Australian and New Zealand dollars and the Yen. Note also that oil prices fell, while the price of gold rose. Investors still prefer safer assets.
Last Friday US labor market data for June was released. It showed that the number of jobs outside agricultural sector in the USA (NFPR) for June has grown by 287 000 against the forecast of 175 000.
The data for May reading was revised down, from 38 000 to 11 000. Unemployment rate rose to 4.9% against the forecast of 4.8% and 4.7% in May. Hourly earnings rose 0.1% versus the forecast of +0.2%.
However, despite positive US employment data for June, market participants’ expectations of the interest rate increase practically have not changed. Probability of the rise in the key rate by the US Fed at the end of this year is now estimated at 24% versus 19% before the release of Friday's employment data.
The USD will not be able to take advantage of the positive NFPR, as further movement of the currency will be determined by the other macro-economic data released until the end of the month, both from the USA and other countries of the world's largest economies.
The USD and other assets, primarily Euro will be also affected by Brexit.
Important macro-economic data schedule for release this week will be as follows:
01:01 (GMT+2) – British retail trade data; even in case of the positive data, the pound will remain under pressure due to Brexit.
08:00 – German indices of wholesale and consumer prices for June.
11:00 – inflation report by the Bank of England.
13:00 – Quarterly review of the Bank of England on the market situation and monetary policy measures in the country.
22:30 – American petroleum Institute (API) will publish report on change in the oil reserves for the last week.
02:30 – Australian consumer confidence index for July. This index shows the level of people’s confidence to the country’s economy.
05:00 – Chinese foreign trade balance for June.
06:30 – Japanese industrial production output for May. This index can affect the yen and Japanese stock market.
11:00 – Industrial production in Eurozone for May.
14:30 – US export/import price indices for June.
16:00 –Bank of Canada interest rate decision and the following up statements by the Bank. It is expected that the current rate of 0.5% will be left unchanged. However, volatility may increase during this period in currency pairs with the Canadian dollar.
16:30 – US Department of Energy will release weekly report on oil and oil products stocks in the US stores.
17:15 – Press conference by Bank of Canada.
20:00 – monthly report on the US budget and the US Fed economic overview for June Beige Book.
00:30 – business activity index in the manufacturing sector of New Zealand for June.
03:00 – important Australian statistics, which can have a strong impact on the Australian currency (inflation expectations in July, employment rate and unemployment rate for June).
13:00 – interest rate decision in the UK. Last week Governor of the Bank of England Mr. Carney indicated in his speech the possibility of the decrease in interest rate at the forthcoming meeting. It is likely that the Pound will significantly weaken at the time of the announcement of the interest rate decision, even if the rates remain unchanged, as this decision will be released simultaneously with the minutes of the Bank of England, which may contain negative outlook for the British economy. It is also expected that the opinion of the members of the monetary policy Committee (MPC) of the Bank of England about the decline in the rates will be in the ratio of 3 to 6.
14:30 – initial claims for unemployment benefits in the USA for last week.
17:15, 19:15 – speeches by the US Fed representatives Lockhart and George.
04:00 – industrial production of China in June. Press conference by the Chinese National Bureau of statistics, Chinese GDP for Q2. Chinese economy is the second largest in the world, therefore the release of Chinese important economic data will have an impact on the financial market. Volatility may be high, especially in the Asian currencies and the USD.
07:30 – Chinese retail sales index, the main indicator of the country’s welfare.
11:00 – European macro-economic statistics, including trade balance for May and consumer price index for June, Volatility in Euro is expected to be high.
14:30 – US retail sales, the main indicator of consumer spending; consumer price index, the key indicator for assessing inflation rate and changes in consumer preferences for June.
15:15 – US industrial production in June.
19:00 – Baker Hughes, oilfield services company report on the number of active drilling platforms in the USA, which is an important indicator of activity in the US oil sector. This report may have a significant impact on the oil prices.