Next week, after the labor market data, the focus will be on the US inflation figures. These numbers will be closely watched before the FOMC meeting on July 25-26. China will also publish data on inflation. In the UK, employment data will be released on Tuesday. As for recent central bank decisions, the Reserve Bank of New Zealand and the Bank of Canada will announce their decisions on Wednesday.
Here’s what to know for next week:
Data released on Friday shows that non-farm payrolls rose by 209,000 in June, coming in below expectations for the first time in 15 months. Another positive surprise was expected after the impressive ADP report released on Wednesday. Despite the slowdown, positive signs from the labor market led the market to expect the Federal Reserve (Fed) to raise its interest rate by 25 basis points at its July meeting.
Next week’s key figures will be inflation in the United States, which will influence expectations of a Fed rate hike. The June Consumer Price Index (CPI) will be published on Wednesday, and on Thursday, the Producer Price Index (IPP). The CPI is expected to rise 0.3% m/m and the annual rate is expected to decline to 3.1% from 4.0%, while the core CPI is expected to fall from 5.3% to 5.0%.
The Dollar Index fell sharply on Friday after the NFP and ended the week significantly lower at around 102.25, rejected from above 103.00. The dollar did not benefit from the rise in US yields. The 10-year yield broke above 4.00% for the first time since March, but this time it remains above.
The EUR/USD pair bounced off the 20-week SMA and ended the week higher, above 1.0950. Next week the Euro needs to break above 1.1000 to open the doors for more gains. The pair benefited from rising Eurozone (EZ) bond yields. Next week no key data will be published in the euro zone. The European Central Bank (ECB) will publish the minutes of its last meeting. A 25 basis point rate hike is expected in July.
The GBP/USD pair posted the highest weekly close in over a year above 1.2800, after rallying sharply on Thursday and Friday. The pair is at year highs around 1.2850. The UK will report employment data on Tuesday, and GDP on Thursday.
After the sharp drop on Friday, USD/JPY completed the worst week in months, retreating from near the 145.00 area of ​​possible intervention to the 142.00 area. The Japanese Yen was the best performing currency within the G10.
USD/CAD fell significantly on Friday after the Canadian jobs report showed the economy added 60,000 jobs. The figure helped reaffirm expectations that the Bank of Canada will raise interest rates by 25 basis points at next week’s meeting. The pair pulled back from the month-to-date highs near 1.3400 towards 1.3250.
TD Securities Analysts:
We expect the BOC to rise another 25 basis points to 5.00% in July. Upward revisions to the TMP for July will be the main catalyst for the hike, but we expect a more balanced statement relative to June after further erosion of sentiment. We also expect the Bank to leave its guidance open, although we believe that 5.00% will signal the terminal rate for the BoC.
The fall of the US dollar boosted the AUD/USD on Friday, which rose to the 0.6700 area, a relevant short-term level for the pair. No key data will be released in Australia next week. However, Chinese inflation will have to be closely watched on Monday and Trade data on Thursday. Reserve Bank of Australia Governor Lowe will speak on Wednesday.
NZD/USD rallied on Friday to test the 0.6220 area. The Reserve Bank of New Zealand will hold its monetary policy meeting next Wednesday. It is expected to keep rates unchanged at 0.5%.
Did you like this article? Help us by answering this survey:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
