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Weekly News Forecast
This week is set to be crucial for the FX markets due to key events such as the latest US inflation report and central bank meetings in New Zealand and Canada. Despite solid economic performance, the US dollar struggled in Q2 as investors predicted a higher-for-longer path for interest rates, delaying the anticipated timing of rate cuts to H2 2024. The upcoming US inflation report could change the FX dynamics as it is expected to show a significant slowdown in inflation, with the headline CPI rate predicted to decline to 3.6% from 4%, and the core rate to drop to 5% from 5.3% in May.
Weekly Outlook High Impact News (7/9/2023)
ALL times are listed in EST (Easter Standard Time).
Sunday, July 9
3:30am GBP: BOE Gov Bailey Speaks
Monday, July 10
11:00am GBP: BOE Gov Bailey Speaks
9:30pm AUD: NAB Business Confidence (Actual: -4)
Tuesday, July 11
2:00am GBP: Claimant Count Change (Actual: 20.5K, Previous: -13.6K)
2:00am GBP: Average Earnings Index 3m/y (Actual: 6.8%, Previous: 6.5%)
5:00am EUR: German ZEW Economic Sentiment (Actual: -10.7, Previous: -8.5)
10:00pm NZD: Official Cash Rate (Actual: 5.50%, Previous: 5.50%)
10:00pm NZD: RBNZ Rate Statement
11:10pm AUD: RBA Gov Lowe Speaks
Wednesday, July 12
4:00am GBP: BOE Gov Bailey Speaks
8:30am USD: CPI m/m (Actual: 0.3%, Previous: 0.1%)
8:30am USD: CPI y/y (Actual: 3.1%, Previous: 4.0%)
8:30am USD: Core CPI m/m (Actual: 0.3%, Previous: 0.4%)
10:00am CAD: BOC Monetary Policy Report
10:00am CAD: BOC Rate Statement
10:00am CAD: Overnight Rate (Actual: 5.00%, Previous: 4.75%)
11:00am CAD: BOC Press Conference
1:01pm USD: 10-y Bond Auction (Actual: 3.79|2.4)
Thursday, July 13
2:00am GBP: GDP m/m (Actual: -0.3%, Previous: 0.2%)
8:30am USD: Core PPI m/m (Actual: 0.2%, Previous: 0.2%)
8:30am USD: PPI m/m (Actual: 0.2%, Previous: -0.3%)
8:30am USD: Unemployment Claims (Actual: 251K, Previous: 248K)
6:45pm USD: FOMC Member Waller Speaks
Friday, July 14
10:00am USD: Prelim UoM Consumer Sentiment (Actual: 65.5, Previous: 64.4)
10:00am USD: Prelim UoM Inflation Expectations (Actual: -, Previous: 3.3%)
The Bank of Canada's rate decision remains uncertain, with market participants divided on a potential 25bps rate increase or no action at all. While a steady inflation decline, struggling manufacturing sector, and falling oil prices suggest a no-action scenario, factors such as a tight labor market, robust consumer spending, and high housing costs despite rising interest rates point towards possible inflation increases. The Reserve Bank of New Zealand is likely to adopt a wait-and-see approach given the mixed economic data, resulting in a minimal reaction in the New Zealand dollar.
Looking ahead, the US dollar's outlook for the second half of the year seems brighter due to the superior economic performance of the US compared to the Eurozone or China. With the central banks approaching the end of their tightening cycles, the next trading theme may be growth differentials, which favor the US. Moreover, a potential shift in global risk appetite could prompt a dollar recovery if stock market euphoria subsides and risk assets correct later this year. Key data releases are expected from China and the UK, including inflation stats, trade data, employment numbers, and GDP data.
Roy Dunia
ChartAddicts Analysis
7/9/2023
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