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Majors, US Dollar Forecast

Forex Weekly Outlook July 11-15

The pound continued its path to the downside once again. Rate decisions in the UK and Canada, Employment data in the US and in Australia, US inflation consumer data stand out. These are the main market movers on forex calendar. Join us as we explore the highlights of this week.

The  U.S. monthly non-farm payrolls release surprised markets with a robust job gain of 287,000 positions during June, exceeding forecast of 175,000 jobs increase. However, May was revised down to only 11K. The unemployment rate rose higher than expected to 4.9% from 4.7 in May. Wages are up 2.6% y/y. All in all, the report was OK.. Uncertainty around Brexit continued weighing on the pound and also had a negative impact on the global mood  Let’s start,

  1. Canadian Rate decision: Wednesday, 14:00. The bank of Canada warned, at its monthly policy decision meeting, that the harsh wildfires in northern Alberta and Saskatchewan will put Canada’s GDP into negative territory in the second quarter. However, the Bank sees no need to alter its monetary policy and expects the Canadian economy to recover in the third quarter. July’s meeting is exactly one year after the last rate cut, down from 0.75% to 0.50%.
  2. US Crude Oil Inventories: Wednesday, 14:00. Crude Oil reserves fell by 2.2 million barrels last week, while analysts forecasted a 2.1million barrel drop. This was the seventh weekly decline in crude stocks. Oil prices fell 5% reaching a two-month low after the U.S. government reported a weekly crude draw that disappointed markets bulls expecting larger declines.
  3. Australian Employment data: Thursday, 1:30.  The Australian employment market gained more positions than estimated, adding 17,900 jobs after an increase of 10,800 in the previous month. Economists forecasted a 14,900 gain. The unemployment rate remained steady at 5.7%. The participated rate remained unchanged at 64.8%. The jobs gain was mostly in part-time work, while full-time positions remained flat. Economists expect a jobs gain of 10,100, with a rise to 5.8% in the unemployment rate.
  4. UK Rate decision: Thursday, 11:00. The Bank of England’s Monetary Policy Committee decided again to keep its interest rate at 0.5%, posting the 87 months since the last interest rates change. Inflation growth weakened to 0.3% and GDP growth slowed to 0.4% in Q1 2016. After the Brexit vote, economists expect the BoE will cut rates to a record low of 0.25% in order to boost activity in the battered economy. Governor Mark Carney hinted the bank will provide further stimulus measures in light of the negative economic data following the UK referendum.
  5. US PPI: Thursday, 12:30. U.S. producer prices edged up 0.4% in May as prices of energy products and services increased, however, the strong dollar continued to weigh on inflation. Economists expected PPI to rise 0.3%. In the 12 months through May, the PPI declined 0.1% after remaining flat in April. Energy prices rose 2.8% following a 0.2% gain in April. Prices for services also increased, advancing 0.2%, following a 0.1% increase in April. Core PPI edged up 0.8% in the 12 months through May. Analysts expect Producer prices will rise 0.3% this time.
  6. US Unemployment Claims: Thursday, 12:30. The number of US weekly jobless claims declined by 16,000 last week to a seasonally adjusted 254,000. Analysts expected a higher figure of 269,000. This was the 70h straight week that claims were below the 300,000 thresholds. The four-week moving average for new claims, declined by 2,500 to 264,750. Continuing jobless claims fell by 44,000 to a seasonally adjusted 2.124 million. Analysts estimate a 263,000 new claims this week.
  7. Chinese GDP: Friday, 2:00. The world’s second largest economy publishes its first and final GDP very soon after the quarter ends and many doubts are cast about the accuracy of the data. In Q1 2016, the economy grew at an annual pace of 6.7%. A slightly slower growth rate is on the cards now: 6.6%. Both figures are within the target of the government in Beijing.
  8. US Inflation data: Friday, 12:30. U.S. consumer prices slowed in May, but remained strong in housing and health care costs. Consumer prices increased 0.2%, following a 0.4% rise in April. In the 12 months through May, CPI advanced 0.1% after rising 1.1% in April. Analysts expected a 0.3% gain in May and a 1.1% rise from a year ago. The Fed said it expects interest rates will remain unchanged and inflation will continue to stay below its target through 2017. Fewer economists expect the Fed will continue with its rate hike plans. Both CPI an Core CPI are expected to rise 0.2%.
  9. US Retail sales: Friday, 12:30. Retail sales advanced more than expected in May, rising 0.5% after a 1.3% increase in April. Economists forecasted a 0.4% rise. This positive reading is a good sign showing consumer spending will help boost economic growth in the second quarter, eliminating the soft patch at the start of the year. The pickup in wages caused by continued increases in employment will help households to remain in economic expansion. Core sales, excluding volatile categories such as food services, auto dealers, home-improvement stores and service stations, increased 0.4% in May following a 1% increase in the prior month, the biggest advance in two years. Economists expect retail sales to rise 0.1%, while core sales are forecasted to rise 0.4%.
  10. US UoM Consumer Sentiment: Friday, 14:00. The UoM Consumer survey in June showed Americans were satisfied with the current state of the U.S. economy, but were less so regarding the future. Sentiment declined to 94.3 from 94.7 in May, but the current conditions rose to an 11 year high, largely due to wage gains. The negative side of this survey is that consumers do not consider the US economy is as strong as it was last year, and do not expect the economy to grow as much as anticipated a year ago. Although economic growth is expected to rise in the second quarter, there are worrisome signs of a slowdown in the labor market in light of the poor jobs growth during June. Inflation remained subdued failing to reach the fed’s 2% annual target for the past four years, but policy makers believe that price growth will strengthen further in the coming months and years. Consumer sentiment is expected to reach 93.7 in July.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

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Anat Dror

Anat Dror

Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer