Fundamental Comment

US jobs report, PMIs to grab attention

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The most important events this week that could weigh on the movements of major currencies will be US non-farm payrolls, as well as Purchasing Managers’ Index reports from a number of major economies.

US Dollar

The U.S. dollar managed to lock a weekly gain last week, after some ease in the trade tensions between the U.S. and China.

This week, eyes will focus on the U.S. non-farm payrolls that will give an update about the health of the labor market in the last month of the second quarter.

American employers have probably created 178,000 jobs in June and unemployment rate have lingered at 3.8 percent, the NFP report may show.

The famous jobs report along with inflation data are likely to shape the future of rate hikes by the Federal Reserve, and therefore it could affect the movements of the dollar by the end of this week.

Meanwhile, there are rising bets the Fed could hike interest rates two more times this year, amid improvement in U.S. economic data.

Fed meeting minutes for June’s monetary decision could provide clues about FOMC members voting on the quarter-point rate increase last month.

The release of June manufacturing and services this week could give a clear picture about growth in the second quarter.

Hence, the aforesaid important data along with any updates about the U.S. trade tensions would shape the dollar’s direction this week.

Euro

Last week, the euro was hit by uncertainty surrounding the trade relations between the U.S. and the EU amid intensions from Trump to impose tariffs on EU car imports.

The most important data this week will be final manufacturing and services PMI for June, which may indicate acceleration in growth pace in the second quarter after the weak figures reported in the first three months.

With the lack of important data from the euro area this week, it seems that the single currency will get its cues from the general market sentiment, where fears mainly push the euro lower while optimism would drive it higher.

Pound Sterling

Investors in the sterling should keep their eyes open this week as the U.K. releases important data and as Prime Minister Theresa May summons her cabinet.

The U.K. will release high relevance PMI figures for June, which will give the latest update about the health of the economy in the second quarter.

Manufacturing, construction and services PMI are predicted to show improvement in June, which, if happened, could give a boost to the sterling.

On the political front, May will meet with her entire cabinet to draw future plans about trade and security ties with the EU, amid speculations that May aims to push through a softer Brexit.

Commodities

Gold reported its third straight weekly decline last week, as it investors continued to prefer buying other safe havens and the U.S. dollar over the precious metal.

The yellow metal’s direction this week will largely depend on the green currency’s movements, where a retreat in the dollar could help bullion prices start a recovery.

For this week, gold could find support near $1244 an ounce, while $1259 would be the key resistance.

Regarding oil, crude prices climbed to a new 3-1/2 year high last week after sharp decline in U.S. crude inventories, where stockpiles marked the biggest fall since September 2016.

Crude prices have benefited from the tight supply amid concerns from investors regarding the prospect of a big drop in crude exports from Iran due to U.S. sanctions.

U.S. crude inventories may have slipped by 1.6 million barrels in the week ended June 29 after a crude draw of 9.9 million barrel a week before, according to the U.S. government EIA report forecasts.

Further draw in U.S. crude inventories could help oil prices to extend gains, but other factors such as trade tensions may prevent oil from resuming its rally.

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