The US dollar remained on the back foot throughout most of the week, with the jobs report allowing for a comeback. Is this a temporary correction or the start of a dollar rally? The upcoming week features US inflation figures, the JOLTs data, a rate decision in New Zealand and more. Here are the highlights for the upcoming week.
The US dollar suffered from further chaos in the White House. Anthony Scaramucci joined Reince Priebus in the long list of ex-staffers. Together with another failure of the health bill, the dollar suffered another round of losses. However, a solid jobs report allowed the dollar to recover on Friday: another gain of over 200K jobs and a rise of 0.3% in wages did the job.The euro took advantage as GDP growth looked good in the euro-zone. The pound wobbled on the BOE. USD/CAD seemed to have taken a much-needed pause as oil prices topped out. The Aussie also struggled as the RBA left its forecasts unchanged.Updates:
- Neel Kashkari talks: Monday 15:25 and also Friday at 15:30. The President of the Minnesota Fed is an outspoken dove that dissented from the previous rate hikes. It will be very interesting to hear his comments on the latest jobs report. If it is good enough for Kashkari, it is a hawkish sign from the Fed.
- US JOLTS Job Openings: Tuesday, 14:00. The number of job openings serves as another indicator of the health of the job market. While it lags the NFP, the Fed told markets it is of high importance. After beating expectations for quite a few months, May’s number was a setback: a drop to 5.67 million annualized. A small gain is on the cards now. A similar level of 566K is expected now
- Chinese inflation figures: Wednesday, 2:00. The world’s second largest economy is seeing rising costs for producers, with the PPI advancing at 5.5% y/y and 5.6% is expected now. CPI is lagging behind with 1.5% and a repeat of the same score is projected. China often “exports” inflation or deflation. The recent rises imply higher inflation in other countries, especially in the US.
- US Unit Labor Costs: Wednesday, 12:30. This quarterly measure serves as another indicator for wages or inflation. Higher costs of labor could trigger an earlier rate hike. In Q1 2017, costs rose by 2.2% in the final read after an initially strong read for of 3%. An increase of 1.2% is forecast.
- Crude Oil Inventories: Wednesday, 14:30. The weekly report has a significant impact on oil prices, the Canadian dollar and also the US dollar, with an inverse correlation on the latter. The recent rise in oil prices goes hand in hand with the fall of the US dollar. The smaller–expected draw of 1.5 million weighed oil prices.
- New Zealand rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand has maintained the interest rate at 1.75% since the cut last November. The recent disappointing jobs report means no imminent rate hike is on the cards. The RBNZ and Governor Graeme Wheeler have tried to talk down the kiwi. Will they succeed this time as well? The jobs report provides a justification.
- US PPI: Thursday, 12:30. Producer prices eventually feed into consumer prices. In June, PPI advanced by 0.1% and so did Core PPI, all in all within expectations. Small gains are expected now as well1% on the headline and 0.2% on the core.
- US jobless claims: Thursday, 12:30. This weekly barometer of jobs has been very stable of late, coalescing around 240K. A similar measure is on the cards now. Note that the report falls within the week that the BLS makes its survey for the NFP. A small rise f240K to 244K is estimated.
- Bill Dudley talks: Thursday, 14:00. The President of the New York Fed is considered No.3 at the powerful institution. He is relatively close to the views of Fed Chair Janet Yellen and his response to the jobs report, including wages, will be of importance.
- US CPI: Friday, 12:30. Jobs are rising but inflation is stuck behind. CPI remained flat month over month in June and core CPI advanced only 0.1%. On a year over year basis, inflation remained subdued at 1.7%, the same as in May. For the month of July, both measures are expected to rise by 0.2%.
- Robert Kaplan talks: The President of the Dallas Fed has previously expressed worries about inflation. In his public appearance, he will have the chance to respond the latest inflation report and perhaps provide hints about the next moves by the Fed.
*All times are GMT
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