Last week ended with the strengthening of the dollar on the foreign exchange market. The scales tipped in favor of the dollar on Friday after the Fed’s Janet Yellen’s speech, in which she stated that "the arguments in favor of raising key interest rates have increased in recent months."
But a greater impact on the dollar dynamics was, perhaps, exerted by the comments of Vice-Chairman of the Federal Reserve Stanley Fischer that he gave on Friday at the end of the day, that the US central bank may raise interest rates next month. "The speech of the Fed Chairman Janet Yellen held earlier on Friday gives a positive answer to this question," Fisher said. However, both Yellen and Fisher, and other Fed officials noted that the decision to raise interest rates in the United States depends on the data.
Now the attention of market participants this week will be focused on the publication of the data on the labor market in the US in August on Friday. Non-Farm PayRolls (NFPR) is the second most important economic indicator in the US after the GDP affecting the decision on interest rates. Meeting of the Federal Reserve on the matter is scheduled for September 20-21.
Also, please note that this is the last (incomplete) trading week of August.
As always, we expect the publication of important macroeconomic data and several important news on the upcoming trading week.
15:30 (GMT +3) - US inflation indices for July (personal consumption expenditures, personal income / expenses).
17:30 - business activity index in industry from the Federal Reserve Bank of Dallas in August.
2:30 - household spending, unemployment level, retail sales in Japan - the most important indicators of inflation level and labor market of Japan in July. We expect strong volatility in the yen and the Japanese stock index Nikkey.
10:00 - KOF leading indicators index, which is considered an indicator of economic stability in Switzerland, in August, employment rate in the 2nd quarter. Please pay attention to trading positions with the Swiss franc.
11:30 - UK inflation indices for July (consumer credit, approved mortgage applications).
15:00 - inflation index in Germany in August (pre-release). The indices have an impact on the euro and European stock indexes.
15:30 - payment balance of Canada for the 2nd quarter.
16:00 - housing price index in the United States from Standard and Poor's agency in June, which is an important indicator of the American real estate market.
17:00 - consumer confidence level in the US in August, reflecting the confidence of consumers in the country's economic development.
After 17:00, price index for dairy products prepared by the Global Dairy Trade will be published. It usually has a strong effect on the New Zealand dollar quotes.
23:30 - the American Petroleum Institute (API) will publish its report on the change in US oil reserves last week.
2:05 - consumer confidence index from Gfk Group in the UK in August, which is a leading indicator that reflects the level of consumer confidence in economic activity in the country.
2:50 - industrial production level in Japan in July.
04:00 - Sales of new homes in Australia - indicator that assesses the conditions on the housing market. The high value of the index is positive for the AUD, and vice versa.
04:00 – speech of Assistant Governor of the RBA Guy Debelle.
09:00 - UBS consumption indicator in Switzerland. It is an inflation index and it consists of five components: new car sales, activity level in the retail sector, number of nights booked in hotels in Switzerland, level of consumer confidence and volume of credit card transactions). High value of the index is a bullish factor for the franc, and vice versa.
10:55 - labor market indicators in Germany in August. They have an impact on the euro and European stock indices.
11:00, 12:00 - inflation indicators and unemployment rate in Italy, whose economy is the second largest in the euro zone after Germany. They have an impact on the euro and European stock indices.
12:00 - preliminary consumer price index in the euro zone in August in annual terms and unemployment rate for July. Consumer Price Index is a key inflation indicator. It influences the ECB’s inclination to tighten or soften its monetary policy. Deflation is becoming a full-scale threat in the euro zone. According to the forecast, the indicator it expected to grow by 0.3%. Any deviation in either direction will cause an outbreak of volatility both in euro and European stock indices.
15:15 - change in the number of employed people in the US (ADP employment report) in August. Normally, it has a strong impact on the market and the dollar quotation, however, there is no direct correlation with the Non-Farm Payrolls, as a rule. Strong data has a positive impact on the dollar. A decline by 14,000 employees in the private sector of the US is expected (165,000 against 179,000 in July). Worse result will weaken the US dollar.
15:30 - Canadian GDP for June and 2nd quarter in annual terms. Higher value will have a positive effect on the position of the Canadian dollar on the foreign exchange market, and vice versa. Previous value - a 2.4% increase (y-o-y).
16:45 - Chicago business activity index in August, giving an assessment of economic activity in the states of Illinois, Indiana and Michigan. The index is correlated with the ISM business activity index. The result over 50 and the upward trend are positive for the US dollar, and vice versa.
17:00 - pending home sales index in the US in July, one of the most important indicators of the situation on the US real estate market. High result strengthens the US dollar, and vice versa.
17:30 - US Department of Energy publishes its weekly report on US oil and oil products reserves.
2:30 - AiG manufacturing activity index in Australia in August. Value above 50 is positive for the AUD, and vice versa. Previous value of the index was 56.4.
04:00 - business activity index in the manufacturing and services sectors in China in August. China's economy is the second largest in the world after the US. Therefore, the publication of important macroeconomic indicators of the country has a significant impact on the global financial markets, primarily - on the positions of the yuan and other Asian currencies, the dollar, as well as Chinese and Asian stock indices.
4:30 - retail sales in July in Australia.
4:45 - Caixin Manufacturing Purchasing Managers' Index (PMI) by Markit Economics in the manufacturing sector of China's economy in August. It is a leading indicator of the state of the manufacturing sector in China. Just as the PMI of China Federation of Logistics and Procurement (CFLP), it can have a strong impact on the global financial markets.
10:15 - retail sales for August in Switzerland.
10:55 - Markit's Manufacturing Purchasing Managers' Index (PMI) in Germany in August. Manufacturing PMI is an important indicator of business conditions and the general state of the German economy. The value above 50 is positive for the EUR, and vice versa (forecast 53.6).
15:30 - initial jobless claims in the US last week, labor costs and labor productivity in the United States (indicator that characterizes the state of the US economy in general and has an impact on the GDP forecast) in the second quarter. High volatility in USD pairs is expected.
16:45, 17:00 - Manufacturing PMIs in August by Markit Economics and the ISM, assessing the state of production, employment, as well the forecast for the development of the entire US manufacturing sector. ISM gradual acceleration of inflation index for August. High volatility in USD pairs, as well as the US stock indices is expected.
11:00 - GDP of Italy, whose economy is the second largest in the euro zone after Germany, for the 2nd quarter. It has a significant impact on the euro quotes. GDP growth is expected to be at zero.
12:00 - Eurozone inflation index of producer prices for July (it is expected to decline by 2.9% y-o-y and grow 0.1% m-o-m).
15:30 - key monthly data on the labor market in the US in August, among them - Non-Farm PayRolls, as well as data on unemployment in the US, as well as average hourly wage.
15:30 - the US trade balance for July.
17:00 - the total number of orders in the manufacturing sector of the US economy in July. It is expected to increase by 1.0% after falling 1.5% the previous month, which should have a positive impact on the positions of the dollar on the foreign exchange market.
20:00 - Oilfield services company Baker Hughes report on the number of active drilling rigs in the United States, which is an important indicator of the activity of the oil sector of the US economy and significantly affects the quotations of oil prices. At the moment, the number of active drilling rigs in the United States is 406.
Investors will closely monitor Friday's data from the US, because they will give the foundation to build a forecast concerning the further interest rate rises in the US as part of the plan the Fed's monetary policy. Positive data will revive hopes of market participants who expect the dollar to grow, for the next rate hike in the nearest time. Negative data will cause a decrease of the US dollar on the financial market.