Market participants continue to evaluate the results of the Fed meeting that ended on July 31 and the dollar’s prospects in this regard. For now, it still has the potential for further growth, while the world’s largest central banks are moving to a softer monetary policy.
However, the situation, as always, can change dramatically both against the backdrop of unexpected political events and news, and as a result of the release of important macro data.
And in the coming week 05.08.2024 – 11.08.2024, such macro data will be released. Market participants will turn their attention to the publication of important macro statistics on China, the US, the Eurozone, New Zealand, Germany, Canada, as well as the results of the meeting of the RB of Australia on the coming Tuesday.
Note: During the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: PMI indices (from ISM) will assess the situation in the US services sector.
- Tuesday: RBA meeting.
- Wednesday: no important macro statistics is scheduled.
- Thursday: inflation expectations from the RB of New Zealand for the 3rd quarter.
- Friday: CPI indices for China and Germany, as well as data from the labor market of Canada. Volatility may increase sharply at the beginning of the Asian, European, and American trading sessions.
- Key events of the week: publication of PMI (from ISM) in the US services sector, inflation indicators for China and Germany, as well as the RBA meeting.
Monday, August 5
01:45 – CNY: Caixin Services PMI
Caixin Purchasing Managers’ Index (PMI) is a leading indicator of the state of the Chinese services sector. China’s economy is the second largest in the world, so the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.
Previous values: 51.2, 54.0, 52.5, 52.7, 52.5, 52.7 (in January 2024), 52.9, 51.5, 50.4, 50.2, 51.8, 54.1, 53.9, 57.1, 56.4, 57.8, 55.0, 52.9 (in January 2023).
Although a value above 50 indicates growth, a relative decline in the indicator may negatively affect the yuan quotes.
14:00 – USD: ISM Services PMI in the US
This indicator assesses the state of the services sector in the US economy. This sector accounts for about 80% of US GDP. The production of material goods accounts for about 20% of GDP (of which 1% is agriculture and 18% is industrial production). Therefore, the publication of services sector data has a significant impact on the dollar dynamics. A result above 50 is considered a positive factor for the USD.
Previous values: 48.8 in June, 53.8 in May, 49.4 in April, 51.4 in March, 52.6 in February, 53.4 (in January 2024), 50.5 in December, 52.5 in November, 51.9 in October, 53.4 in September, 54.5 in August, 52.7 in July, 53.9 in June, 50.3 in May, 51.9 in April, 51.2 in March, 55.1 in February, 55.2 (in January 2023), 49.6 in December, 56.5 in November, 54.4 in October, 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February, 59.9 (in January 2022).
Growth of the indicator should have a positive impact on USD quotes. However, a relative decrease in the index, especially below 50, may have a short-term negative impact on the dollar.
Tuesday, August 6
04:30 – AUD: RBA’s Interest Rate Decision. RBA’s Accompanying Statement. Reserve Bank of Australia’s Monetary Policy Statement
Since June 2023, the RBA policymakers have kept the interest rate at 4.10%. However, at the November 2023 meeting, they raised the interest rate again to 4.35%.
The main negative factors for the Australian economy are weak wages growth, a weak labor market, and slowing growth.
Following the March meeting, the RBA kept the rate at 4.35%. Head of the RBA Michelle Bullock said at the press conference that “we need to be more confident in the weakening of inflation to consider cutting the rate.” At the same time, the RBA policymakers had previously not ruled out the possibility of a new tightening of the RBA policy if new signs of rising consumer inflation appeared.
What their decision will be this time is not yet entirely clear, although it is possible that the RBA will raise the interest rate again at this meeting.
In the meantime, it is widely expected that the RBA policymakers will take a break again.
In the accompanying statement, the RBA policymakers will explain the rationale for their rate decision. If the RBA signals the possibility of monetary easing in the near term, the downside risks to the Australian dollar will increase. Conversely, the tough rhetoric in the RBA’s accompanying statement could trigger a strengthening of the Australian dollar.
The RBA’s monetary policy commentary provides valuable insight into the bank’s managers’ assessment of economic conditions and inflation dynamics, key factors that will shape the future of monetary policy and influence interest rate decisions.
05:30 – AUD: Press Conference of the RBA
During the press conference, head of the RBA Michelle Bullock will assess the current situation in the Australian economy and will likely reveal the monetary policy plans of the department entrusted to her. Market participants would also like to hear Bullock’s opinion on the central bank’s policy in the context of recession in various regions of the world and high inflation in Australia. Any signals from her regarding plans to change the parameters of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD and on the Australian stock market. If the head of the Central Bank of Australia does not touch on the topic of monetary policy, then the market reaction to her speech will be weak.
09:00 – EUR: Retail Sales in the Eurozone
Retail sales are the leading indicator of consumer spending showing the change in sales in the retail sector. A high result strengthens the euro, while a low result weakens it.
Previous values: +0.1% (+0.3% y/y), -0.5% (0% y/y), +0.8% (+0.7% y/y), -0.5% (-0.7% y/y), +0.1% (-1.0% y/y) in January 2024, -1.1% (-0.8% y/y) in December, -0.3% (-1.1% y/y) in November, +0.1% (-1.2% y/y) in October, -0.3% (-2.9% y/y) in September, 1.2% (-2.1% y/y) in August, -0.2% (-1.0% y/y) in July, -0.3% (-1.4% y/y) in June, 0% (-2.4% y/y) in May, -1.2% (-2.9% y/y) in April, -0.8% (-3.3% y/y) in March, +0.3% (-2.4% y/y) in February, -2.7% (-1.8% y/y) in January, +0.8% (-2.8% y/y) in December 2022.
The data show that retail sales have not only failed to reach pre-COVID levels after a sharp decline in March-April 2020, when strict quarantine measures were in place in Europe, but have also been periodically declining again. Nevertheless, the better-than-expected data is likely to have a positive impact on the euro.
22:45 – NZD: Employment Rate. Unemployment Rate (Data for the 2nd Quarter)
The employment rate measures the quarterly change in the number of New Zealanders in employment. A rise in the indicator has a positive impact on consumer spending, which stimulates economic growth. A high reading is positive for the NZD, while a low reading is negative.
Previous values: -0.2% in Q1 2024, +0.4% in Q4 2023, -0.2% in Q3, +1.0% in Q2, +0.8% in Q1 2023, +0.2% in Q4 2022, +1.3% in Q3, 0% in Q2 2022, +0.1% in Q1 and Q4, +2.0% in Q3, +1.0% in Q2, +0.6% in Q1 2021.
Also at the same time, Statistics New Zealand publishes a report on the unemployment rate – an indicator assessing the ratio of the unemployed population to the total number of working-age citizens. An increase in the indicator shows a weak labour market, which leads to a weakening of the national economy. A decrease in the indicator is a positive factor for the NZD.
Previous (quarterly) values: 4.3% in Q1 2024, 4.0% in Q4 2023, 3.9% in Q3, 3.6% in Q2, 3.4% in Q1 and Q4, 3.3% in Q2 and Q3 2022, 3.2% in Q1 and Q4, 3.4% in Q3, 4.0% in Q2, 4.7% in Q1 2021).
If other indicators in the Statistics New Zealand report come out with a deterioration, this will most likely negatively affect the NZD. Worse than expected data will have an even stronger negative impact on the NZD.
Wednesday, August 7
There are no important macro statistics scheduled to be released. However, traders may want to pay attention to the publication (at 03:00 GMT) of data on the foreign trade balance of China, which may cause an increase in volatility in quotes not only for the yuan, but also for the Australian and New Zealand dollars, as well as the publication (at 14:00 GMT) of the Ivey PMI business activity index, which is a leading indicator showing the degree of economic health of Canada, and may cause an increase in volatility in quotes for the Canadian dollar.
A relatively high figure above 50 is expected, which should have a positive effect on the CAD. Previous values: 62.5, 52.0, 63.0, 57.5.
Thursday, August 8
02:00 – AUD: Speech by Head of the RBA Michelle Bullock
In her speech, Michelle Bullock will assess the current situation in the Australian economy and indicate further plans for the monetary policy of the department after the Central Bank meeting last Tuesday. Market participants would also like to hear Bullock’s opinion on the central bank’s policy in the context of recession in various regions of the world and high inflation in Australia. Any signals from her regarding plans to change the parameters of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD and on the Australian stock market. If the head of the Central Bank of Australia does not touch on the topic of monetary policy, then the market reaction to her speech will be weak.
03:00 – NZD: RB NZ Inflation Expectations (Q3)
New Zealand inflation expectations. The indicator measures consumers’ expectations of future annual inflation over the next 24 months. The higher the expectations, the more significant the effect they will have on the likelihood of a rate hike. A high reading is positive for the NZD.
Previous values (quarterly): +2.33% +2.50% (in Q1 2024), +2.76%, +2.83%, +2.79%, +3.3%, +3.62% (in Q4 2022).
Friday, August 9
01:30 – CNY: Consumer Price Index (CPI)
The National Bureau of Statistics of China will present the monthly data reflecting the dynamics of consumer prices in China. The growth of consumer prices may trigger an acceleration of the inflation rate, which may force the People’s Bank of China to take measures aimed at tightening fiscal policy. Increased growth of consumer inflation may cause the yuan to appreciate, a low result will put pressure on the yuan.
China’s economy is the second in the world after the US. Therefore, the publication of important macroeconomic indicators of this country has a noticeable impact on global financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as on Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished goods to the global commodity market.
In June 2024, the consumer inflation index was -0.2% (+0.2% year-on-year), -0.1% (+0.3% year-on-year), +0.1% (+0.3% year-on-year) in April, +0.1% (-2.7% year-on-year) in December 2023, -0.5% (-0.5% year-on-year) in November, +0.2% (0% year-on-year) in September, +0.3% in July (+0.1% year-on-year), -0.2% in June (0% year-on-year), -0.2% (+0.2% year-on-year) in May.
The growth of the consumer inflation index will have a positive effect on the yuan and commodity currencies. However, data worse than expected and a relative decline in the CPI indicator may have a negative impact on them. This is especially true for the Australian dollar, as China is Australia’s largest trading partner.
06:00 – EUR: Harmonized Index of Consumer Prices in Germany (Final Estimate)
Harmonized Index of Consumer Prices (HICP) is published by the EU Statistical Office and is calculated using a statistical method agreed upon by all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.
Previous values of the indicator: +2.5%, +2.8%, +2.4%, +2.3%, +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3.0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9.2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (annualized).
The data shows that inflation in Germany continues to slow, albeit at a slower pace than expected, which in turn puts pressure on the ECB to ease its monetary policy. Data that is weaker than the previous value is likely to have a negative impact on the euro. Conversely, a resumption of inflation growth could trigger a strengthening of the euro. An increase in the indicator is a positive factor for the euro.
If the data for July turns out to be better than the previous values, the euro could strengthen in the short term.
12:30 – CAD: Unemployment Rate in Canada
Statistics Canada will release the country’s labour market data for July. Unemployment has risen in Canada since 2020 amid widespread coronavirus-related business closures and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and to 13.7% in May 2020.
In June 2024, unemployment was at 6.4% against 6.2% in May, 6.1% in April and March, 5.8% in February, 5.7% in January 2024, 5.8% in December and November 2023, 5.7% in October, 5.5% in September, August and July, 5.4% in June, 5.2% in May, 5.0% in April, March, February, January, December, 5.1% in November, 5.2% in October and September, 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022).
If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, the Canadian dollar will strengthen. A decrease in unemployment is a positive factor for the CAD, while an increase in unemployment is a negative factor.
Price chart of AUDUSD in real time mode
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