FX Week Ahead Overview:
- With an oversaturated economic calendar highlighting 14 high-rated events, including the UK and US inflation reports, this is the most important week of the month.
- In the coming days, central banks will focus on setting interest rates by the Bank of Canada, the Bank of Japan and the Reserve Bank of New Zealand., plus a congressional certificate from Jerome Powell, chairman of the Federal Reserve.
- In general, there are recent changes retailer positioning Recommend US dollar disagrees.
Please visit the website throughout the week DailyFX economic calendar.
TUESDAY 12:30 GMT | USD inflation rate (JUN)
Price pressures in the US remain high – but the pace of change is slowing. According to a Bloomberg News study title USA inflation rate is deadline at + 0.5% from + 0.6% (m / m) and +4.9% from +5.0% (y / y) in In June, together core inflation rate (former energy and food) deadline at + 0.4% from + 0.7% (m / m) and +4.0% from +3.8% (ice).
Although, in theory, hot inflation readings should spread to higher US Treasury yields, the fact that the Federal Reserve continues to decisively demand “largely temporary” inflation may hinder a significant shift in yields. Accordingly, the US dollar has an asymmetric risk: a hot inflation report may do nothing to raise yields; a softer inflation reading could justify a second lower return.
WEDNESDAY 02:00 GMT | New Zealand NZD Reserve Bank Interest Rate Decision
The interim period since the May RBNZ political meeting has yielded a number of strong economic data reports, and when viewed in the context of the RBNZ’s changing mandate (including house prices), the “permanent as it goes” attitude seems to be more aggressive this time around. Although no new forecasts will be seen from the RBNZ at the July meeting, the simple recognition that the New Zealand economy has developed far enough to justify discussions on rising interest rates sufficient markets Kiwi offer.
New Zealand Reserve Bank interest rate expectations (12 July 2021) (Table 1)
Although it was noted in May that “RBNZ may make the opening games of the removal of stimulus plans eventually, but not in the near future against the interest rate channel,” this is no longer the case. While two months ago, by the end of the year, the 25 basis point rise in interest rates was around 30%, the New Zealand overnight index swaps are 72% likely to be the price of such an event.
WEDNESDAY 06:00 GMT | GBP inflation rate (JUN)
It is important to note that it is now Andy Haldane former Chief Economist of the Bank of England. What is remarkable is that he was the loudest voice among Threadneedle Street policymakers. Although asset purchases are declining, removing Haldane’s vote from the conversation may make the BOE Monetary Policy Committee less sensitive to elevated inflation readings.
The first post-administrative inflation report is due this week. According to a Bloomberg News study, title JuneGreat Britain inflation rate is deadline at + 0.2% from + 0.6% (m / m) and +2.2% from +2.1% (ice), together core inflation rate (former energy and food) two in unchanged at + 2% (and / or). Given that price pressures have eased, the United Kingdom’s June Inflation Report may not British pound.
WEDNESDAY 14:00 GMT | CANADA CAD-BANK RATE DECISION
A strong labor market and persistent inflation readings in excess of the BOC’s mandate – as well as the fact that the BOC forecasts inflation beyond its mandate for several years to come – have increased the likelihood that the next step in the stimulus will take place at the July BOC policy meeting. This should come as no surprise when BOC announces a $ 1 billion cut in its QE program, bringing its asset purchases to $ 2 billion a week.
Bank of Canada interest rate expectations (July 12, 2021) (Table 1)
In line with previous efforts, the BOC has explained that it is satisfied with its decision to restrict, but it is still likely that further action through the interest rate channel is highly unlikely. According to Canadian overnight index swaps, a 4% increase in interest rates at the July meeting is likely to be 4%, and these coefficients will only rise to a modest 36% by the end of the year.
THURSDAY 01:30 GMT | AUD employment change and unemployment rate (JUN)
The Australian labor market is recovering from momentum and start-ups without greater consistency in recent months. According to a Bloomberg News study, the Australian economy added + 30,000 jobs a year In June, a significant decrease compared to + 115.2 thousand jobs added in May. The unemployment rate is expected to fall slightly from 5.1% to 5.0%. However, if Australia closes again, a strong labor market report may be overlooked, as data on weaker jobs are expected to arrive in the coming months; a good work report can be properly rejected.
– Written by Senior Currency Strategist Christopher Vecchio, CFA