The most important events this week that could weigh on the movements of major currencies will be US non-farm payrolls, as well as the Bank of England’s interest rate decision and Purchasing Managers’ Index reports from a number of major economies.
With the ease of the trade tensions after a deal between Trump and Junker, the U.S. dollar managed to lock a weekly gain last week.
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 first month of the third quarter.
American employers have probably created 191,000 jobs in July and unemployment rate have lingered at 4 percent, the NFP report may show.
The famous jobs report along with inflation data are likely to shape the future of interest rate hikes by the Federal Reserve, and therefore it could affect the movements of the dollar by the end of this week.
Most probably, the Fed will decide whether one or two more rate hikes this year would be convenient according to economic data, and they will probably ignore Trump’s criticism to the rate hike path and the dollar’s strength.
Fed meeting minutes for July’s monetary decision due this week would provide clues about FOMC members’ voting and point of views of policymakers.
The release of July manufacturing and services PMI data this week could give a clear picture about U.S. growth in the third quarter.
Therefore, the aforesaid important data along with any updates about the U.S. trade tensions would shape the dollar’s direction this week.
Last week, the euro finished lower after the ECB signaled no change in their monetary stance and after the release of a weak growth report by France.
The most important data this week will be the preliminary euro-area GDP data, which may show the economy grew 0.5 percent in the three months through June after a 0.4 percent expansion in the first quarter.
The final manufacturing and services PMI for July may indicate deceleration in growth pace to 54.3 from 54.9 in June.
Another important report is predicted to show a slowdown in eurozone inflation to 1.9 percent in the year ended July from a previous of 2.0 percent.
The high-relevance data should give direction to the euro this week, but the general sentiment in the market could have the upper hand.
Investors in the sterling should keep their eyes open this week as the U.K. releases important data and as the Bank of England would decide on interest rates.
The BOE will release its quarterly inflation report that will include the central bank’s latest inflation and growth outlook for the U.K. economy.
Based the bank’s assessment, policymakers may decide to raise the borrowing cost to 0.75 percent from 0.50 percent or hold the rate at its record low.
The U.K. will also release important PMI figures for July, which will give the latest update about the health of the economy at the beginning of the third quarter.
Manufacturing and services PMIs are predicted to show improvement in July, while the construction gauge may signal an ease in the pace of expansion, according to median forecasts.
The super Thursday, which will include the BOE rate decision, inflation report and Carney’s speech, will probably affect the pound’s movements the most.
While it has recently rebounded from a one-year low, gold failed to resume its rebound attempts as the dollar’s advance kept pressure on the metal.
The yellow metal’s direction this week will largely depend on the response of the dollar to economic data and the latest developments in the trade tensions.
For this week, gold could find support near $1211 an ounce, while $1236 would be the key resistance.
Regarding oil, crude prices soared again after the ease in trade tensions between the United States and Europe and after a report showing more than forecast draw in U.S. crude inventories.
U.S. crude inventories may have slipped by 0.09 million barrels in the week ended July 27 after a crude drop of 6.1 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 extend their
gains, but other factors such as trade tensions and crude supply may prevent
oil from resuming its rally.