The dollar remains under pressure after the publication of disappointing data on the state of the American economy and labor market at the beginning of the month. Speaking to Congress last week with his semi-annual report on monetary policy, the Fed Chairman Jerome Powell attempted to reassure dollar buyers by reaffirming the intention of US Central Bank officials to continue the fight against still high inflation.
Now, after the publication of data on inflation and the US labor market, investors’ attention is shifting to the end of the month, when the next Fed meeting dedicated to monetary policy issues ends on July 31.
Market expectations for two Fed rate cuts this year and the first cut in September are still largely still there.
In the coming week, 15.07.2024 – 21.07.2024, market participants will pay attention to the publication of important macro statistics from China, Canada, the US, New Zealand, the UK, Australia, as well as the results of the ECB meeting.
Note: During the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled. Time is GMT
The article covers the following subjects:
Key facts
- Monday: A block of macro data from China will determine market dynamics during the Asian trading session.
- Tuesday: Volatility is expected to increase at the beginning of the US trading session, especially in the USD/CAD pair due to the release of Canadian CPI and US retail sales data
- Wednesday: The focus will be on the pound: UK CPI is to be published at the beginning of the European trading session. The expected decline in indices may have a negative impact on the GBP.
- Thursday: ECB meeting.
- Friday: The pound will again attract the attention of market participants – data on retail sales in the UK will be published in the morning.
- Central event of the week: Publication of the ECB’s decision on interest rates. It will be a surprise for markets if the ECB leaders decide to cut rates again. A soft rhetoric of their statements could also have a negative impact on the euro
Monday, July 15
02:00 CNY China’s GDP for the 2nd quarter. Industrial production. Retail sales level index
China’s National Bureau of Statistics will report GDP growth data in the 2nd quarter of 2024.
Chinese GDP is expected to grow again in 2Q 2024 after +1.6% (+5.3% yoy) in 1Q 2024, +1.0% (+5.2% yoy) in the 4th quarter of 2023, +1.3% (+4.9% in annual terms) in the 3rd quarter of 2023, +0.8% (+6.3% in annual terms) in 2nd quarter 2023, +2.2% (+4.5% in annual terms) in 1st quarter, 0% (+2.9% in annual terms) in 4th quarter 2022, +3 .9% (+3.9% in annual terms) in the 3rd quarter, -2.6% (+0.4% in annual terms) in the 2nd quarter, +1.3% (+4.8% in in annual terms) in the 1st quarter of 2022, +1.6% (+4.0% in annual terms) in the 4th quarter, by +0.2% (+4.9% in annual terms) in 3 – quarter, +1.3% (+7.9% in annual terms) in the 2nd quarter and +0.6% (+18.3% in annual terms) in the 1st quarter of 2021.
China is the largest buyer of raw materials and a supplier of a wide range of finished products to the global commodity market. China’s economy is the second largest in the world after America’s. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.
At the same time, China is the largest trade and economic partner of Australia and New Zealand and a buyer of raw materials from these countries.
Therefore, positive macro statistics from China may also have a positive impact on the quotes of these commodity currencies. If the expected data indicates a slowdown in one of the world’s largest economies, this will be a negative factor for global stock markets and commodity currencies.
The China National Bureau of Statistics Industrial Production Data Report shows the output of Chinese industrial enterprises such as factories and production facilities. The growth of the indicator (industrial production) is a positive factor for the yuan, also indirectly signaling the possibility of accelerating inflation rates, which could put pressure on the People’s Bank of China to tighten monetary policy.
Conversely, a decrease in the indicator could have a negative impact on the yuan.
Previous values (annualized): +5.6%, +6.7%, +4.5%, +7.0%, +6.8%, +6.6%, +4.5%, +3.7%, +4.4%, +3.5%, +5.6%, +3.9%, +2.4% (in February 2023).
Retail Sales Index is published monthly by the National Bureau of Statistics of China and measures total retail sales and cash receipts. The index is often considered an indicator of consumer confidence and economic well-being and reflects the health of the retail sector in the near term. A rise in the index is usually a positive for CNY; a decrease in the indicator will have a negative impact on CNY. Previous index value (in annual terms): +3.7%, +2.3%, +3.1%, +5.5%, +7.4%, +10.1%, +4.6% , +2.5%, +3.1%, +12.7%, +18.4%, +10.6%, +3.5%, -1.8%, -5.9% (after growth of +8% in the last months of 2019 and a fall of -20.5% in February 2020).
Data indicate a continued recovery in this sector of the Chinese economy after a strong decline in February–March 2020. If the data turns out to be weaker than the forecast or previous values, the CNY may weaken, possibly sharply.
Tuesday, July 16
08:00 EUR Eurozone Bank Lending Study
A study of the state of the bank lending system conducted by EU financial experts is carried out 4 times a year. The main goal of the study is to obtain expanded information about the conditions of bank lending in the Eurozone.
The data obtained is used by the ECB management when making decisions on the bank’s monetary policy. This report may cause increased volatility in euro prices and the European stock market at the time of its publication if it contains unexpected findings regarding lending conditions for businesses and households in the Eurozone.
12:30 CAD Consumer price indices in Canada
Consumer Price Index (CPI) reflects the dynamics of retail prices of the corresponding basket of goods and services, and the core indicator (Core CPI) does not take into account fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transport, and tobacco products. The inflation target for the Bank of Canada is in the range of 1% – 3%. An increase in the CPI indicator is a harbinger of a rate increase and a positive factor for the CAD.
Previous values:
- Consumer Price Index: +0.6% (+2.9% in annual terms), +0.5% (+2.7% in annual terms), +0.6% (+2.9% in annual terms) ), +0.3% (+2.8% in annual terms), 0% (+2.9% in annual terms), -0.3% (+3.4% in annual terms), +0, 1% (+3.1% in annual terms), +0.1% (+3.1% in annual terms), -0.1% (+3.8% in annual terms), +0.4% (+4.0% in annual terms), +0.6% (+3.3% in annual terms), +0.1% (+2.8% in annual terms),
- Core Consumer Price Index (from the Bank of Canada): +0.6% (+1.8% in annual terms), +0.2% (+1.6% in annual terms), +0.5% (+2 .0% in annual terms), +0.1% (+2.1% in annual terms), +0.1% (+2.4% in annual terms), -0.5% (+2.6 % in annual terms), +0.1% (+2.8% in annual terms), +0.3% (+2.7% in annual terms), -0.1% (+2.8% in annual terms), +0.1% (+3.3% in annual terms), +0.5% (+3.2% in annual terms), -0.1% (+3.2% in annual terms).
Data indicate a continued slowdown in inflation, which puts pressure on the Canadian Central Bank to decide on a looser monetary policy. If the expected data turns out to be worse than previous values, this will negatively affect the CAD. The data stronger than previous values will strengthen the Canadian dollar.
12:30 USD Retail sales. Retail control group
Retail sales. This Census Bureau report reflects the total sales of US retailers of all sizes and types. Changes in retail sales are a leading indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. A high result strengthens the US dollar, a low result weakens it. A relative decrease in the indicator may have a short-term negative impact on the dollar, while an increase in the indicator will have a positive impact on the USD. In the previous month (May), the indicator value was +0.1% (after 0% in April, +0.7% in March, +0.6% in February, -0.8% in January 2024, +0. 6% in December 2023, +0.3%, -0.1% +0.7%, +0.6%, +0.7%, +0.2%, +0.3%, +0 .4%, -1.0%, -0.6%, +3.2%, -0.8%, -1.1%, +1.1%, -0.2%, +0.7 %, -0.4%, +1.0% in previous months).
Retail sales are the leading indicator of consumer spending in the United States measuring changes in retail sales.
Retail sales are an indicator of domestic consumption, which accounts for the main contribution to US GDP and is one of the main factors in increasing or decreasing inflation risks. The deterioration of this indicator is, therefore, a negative factor for the dollar.
Slowing inflation could push the Fed officials to begin easing monetary policy in September, economists say. At the same time, most market participants still expect 2 interest rate cuts this year.
Retail Control Group measures volume across the entire retail industry and is used to calculate price indices for most products. A strong result strengthens the US dollar, and conversely, a weak report weakens the dollar. A slight increase in indicators is unlikely to accelerate the growth of the dollar. The data is worse than the values of the previous period (+0.4%, -0.3%, +1.1%, 0%, -0.4% in January 2024, +0.8%, +0.4%, + 0.2%, +0.6%, +0.1%, +1.0%, +0.6%, +0.2%, +0.7%, -0.3%, +0, 5%, +2.3%, -0.3%, -0.5%, +0.4%, +0.5%, +0.4%, +1.1% in previous months of 2022) may negatively affect the dollar in the short term.
22:45 NZD CPI (Consumer Price Index) for the 2nd quarter of 2024
Consumer Price Index (CPI) is a key indicator for assessing inflation and reflects the dynamics of retail prices for a group of goods and services included in the consumer basket. A positive result strengthens the NZD, a negative result weakens it.
Previous CPI values: +0.6% (+4.0% annualized) in the 1st quarter of 2024, +0.5% (+4.7% annualized) in the 4th quarter of 2023, +1.8% (+5.6% annualized) in the 3rd quarter of 2023, +1.1% (+6.0% annualized) in the 2nd quarter of 2023; and in annual terms: +6.7% in the 1st quarter of 2023, +7.2% in the 4th and 3rd quarters of 2022, +7.3% in the 2nd quarter, +6.9 % in the 1st quarter of 2022, +5.9% in the 4th quarter of 2021, +4.9% in the 3rd quarter of 2021, +3.3% in the 2nd quarter of 2021, +1.5% in the 1st quarter of 2021.
A relative decrease in the indicator and a value below the forecast could negatively affect the NZD quotes.
Wednesday, July 17
06:00 GBP Consumer Price Index. Core Consumer Price Index
Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services included in the British consumer basket. The CPI index is a key indicator of inflation. Its release causes active main movement of the pound on the foreign exchange market, as well as the London Stock Exchange FTSE100 index.
In the previous reporting month (May), consumer inflation increased by +0.3% (+2.0% annualized) after +0.3% (+2.3% annualized) in April, +0.6% (+3.2% annualized) in March, +0.6% (+3.4% annualized), -0.6% (+4.0% annualized) in January 2024, + 0.4% (+4.0% annualized) in December. The data suggests that inflationary pressures still remain in the UK, which is likely to support the pound, especially if the data turns out to be higher than expected.
An indicator value below the forecast/previous value could trigger a weakening of the pound, as low inflation will force the Bank of England to maintain a loose monetary policy.
Core Consumer Price Index (Core CPI) is published by the Office for National Statistics and measures changes in the prices of a selected basket of goods and services (excluding food and energy) over a given period. It is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the GBP, a negative result weakens it.
In May, the growth rate of Core CPI also slowed down, amounting to +3.5% (in annual terms) after +3.9%, +4.2%, +4.5%, +5.1% in January 2024, December and November, after an increase of +5.7% +6.1%, +6.2% 3 months earlier. It is likely that the publication of the indicator will have a short-term positive impact on the pound if its value is higher than the forecast and previous values. An indicator value below the forecast and/or previous values may trigger a weakening of the pound.
Thursday, July 18
01:30 AUD Employment level. Unemployment rate
The employment rate reflects the monthly change in the number of employed Australians. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value of the indicator is a positive factor for the AUD, and a low value is a negative factor. Previous values of the indicator: +39700 in May, +38500 in April, -6600 in March, +500 in February, -65100 in January 2024, +61500 in December 2023, +55000 in October, +6700 in September, +64900 in August, -14600 in July, +32600 in June, +75900 in May, -4300 in April, +53000 in March, +64600 in February, -11500 in January, +14600 in December, +64000 in November, +32200 in October, +900 in September, +33500 in August, -40900 in July, +88400 in June, +60600 in May, +4000 in April, +17900 in March, +77400 in February, +12900 in January 2022.
Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate – an indicator that evaluates the ratio of the unemployed population to the total number of working-age citizens. An increase in the indicator indicates a weak labor market, which leads to a weakening of the national economy. A decrease in the indicator is a positive factor for the AUD.
Forecast: unemployment in Australia in June remained at its minimum levels at 4.0% (against 4.0% in May, 3.8% in April, 3.7% in March and February, 4.1% in January, 3 .9% in December and November, 3.8% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3.6% in May, 3.7% in April, 3.5% in March and February, 3.7% in January, 3.5% in December, 3.4% in November and October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3.9% in May and April, 4.0% in March and February, 4.2% in January), and employment increased.
The RBA leaders have previously repeatedly stated that in addition to the situation in international trade, the Australian economy and the central bank’s monetary policy plans are influenced by the level of debt and household spending, the growth of workers’ wages, as well as the state of the country’s labor market. If the indicators turn out to be worse than forecast, the Australian dollar may decline significantly in the short term. Better-than-forecast data will strengthen the AUD in the short term.
06:00 GBP Report on the average wages of the British over the last 3 months. Unemployment rate
Every month, the UK Office for National Statistics (ONS) publishes a report on average wages covering the period for the last 3 months, with and without bonuses.
This report is a key short-term indicator of the dynamics of changes in the level of wages of employees in the UK. Wages growth is a positive factor for the GBP, while a low indicator is negative. Forecast: The July report suggests that average wages with bonuses rose again in the last 3 months calculated (March-May), after rising +5.9%, +5.7%, +5.6%, +5 .6%, +5.8%, +6.5%, +7.2%, +7.9%, +8.1%, +8.5%, +8.2%, +6.9 %, +6.5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1%, +5.5%, + 5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +4.8%, +4.3%, +4.2% in previous periods); wages without bonuses also increased after growth of +6.0%, +6.0%, +6.0%, +6.1%, +6.2%, +6.6%, +7.3%, + 7.7%, +7.8%, +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, +6.6%, +6, 6%, +6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4.7%, +4.4% , +4.2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods). Thus, the data indicates continued growth in wages, which is positive for the pound. If the data turns out to be better than the forecast and/or previous values, the pound is likely to strengthen in the foreign exchange market. Data worse than forecast/previous values will have a negative impact on the pound.
Also at this time, unemployment data in the UK is published. It is expected that for 3 months (March-May) unemployment was at 4.4% (against 4.4%, 4.3%, 4.2%, 4.0%, 3.8%, 3.9% , 4.0%, 4.1%, 4.2%, 4.3%, 4.2%, 4.0%, 3.9% in previous periods).
Since 2012, the UK unemployment rate has fallen steadily (from 8.0% in September 2012). This is a positive factor for the pound; rising unemployment is a negative factor.
If data from the UK labor market turns out to be worse than the forecast and/or the previous value, then the pound will be under pressure.
In any case, at the time of publication of data from the British labor market, volatility is expected to increase in the pound quotes and on the London Stock Exchange.
12:15 EUR ECB rate decision
The ECB will publish its decision on the key rate and deposit rate, which currently stand at 4.25% and 3.75%, respectively.
The ECB’s tough position on inflation and the level of key interest rates helps to strengthen the euro, while a soft position and rate cuts weaken the euro. Given the high level of inflation in the Eurozone, according to the ECB leaders, the balance of risks to the economic prospects of the Eurozone “remains biased in the negative direction.”
According to the ECB leaders, “inflation is still high” and “the ECB intends to reduce it to 2% in a timely manner.”
The ECB believes that GPP growth may decline due to the energy crisis in the EU, high uncertainty, weakening global economic activity and tightening financing conditions. However, the recession should not drag on too long, although strong growth should not be expected either.
Thus, if we follow these signals from the ECB leaders, at the end of this meeting the key interest rate and the ECB deposit rate for commercial banks will remain at the same level. Although, the option of a tougher decision and an increase in interest rates, as well as a pause in increases, cannot be ruled out.
This decision (pause) is supported, for example, by the fact that consumer inflation in the Eurozone is still gradually slowing down, while the threat of recession in the region remains.
12:45 EUR ECB press conference. ECB Monetary Policy Statement
The press conference will be of primary interest to market participants. During this process, a surge in volatility is possible not only in euro quotes, but throughout the entire financial market if ECB leaders make unexpected statements. ECB leaders will assess the current economic situation in the Eurozone and comment on the bank’s decision on rates. In previous years, following the results of some ECB meetings and subsequent press conferences, the euro exchange rate changed by 3%-5% in a short time.
A soft tone of the statements will have a negative impact on the euro. Conversely, a tough tone from the ECB leaders regarding the central bank’s monetary policy will strengthen the euro.
Friday, July 19
06:00 GBP Retail sales
The economic indicator “Retail Sales” tracks the level of consumer demand and is the most important indicator influencing the market and quotes of the national currency. It is also an indirect indicator of inflation, thus being of interest both to the country’s Central Bank and to market participants.
The Retail Sales Report is produced by the UK Office for National Statistics. Changes in retail sales are generally considered an indicator of consumer spending. In general, a high indicator is a positive factor for the GBP, while a low value is a negative factor.
Previous index values: +1.3%, -2.3%, +0.4%, -0.3%, +0.4% (in January 2024), -2.8% (in December 2023 ), +0.0%, -2.3%, -1.1%, -1.2%, -3.1%, -1.8 (in June 2023) in annual terms.
Price chart of EURUSD in real time mode
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