US Crude Oil Inventories, Rate decision in New Zealand, US Unemployment Claims, German GDP data, US Retail sales, Producer prices and Consumer sentiment. These are the major events on forex calendar. Here is an outlook on the market movers of this week.
Last week, U.S. monthly employment report surprised markets with a better than expected job gain of 255,000 in July, following an upwardly revised addition of 292,000 posted in the prior month. The release was far better than the forecast of 180,000 job gain. This robust job creation is a good sign for policymakers after May’s weak report. The unemployment rate remained steady at 4.9%, while expected to decline by 0.1%. Wages climbed 2.6% from the year before but still remain below pre-crisis levels. The lukewarm salary gains and the unusually high proportion of workers employed part time, has led some economists to question whether the payroll figures reflect the true state of the employment market. Will this positive trend continue?
Let’s start,
- US Crude Oil Inventories: Wednesday, 14:30. U.S. crude inventories increased for the second consecutive, gaining 1.4 million barrels . The release missed analysts’ forecast for a decrease of 1.6 million barrels. However, gasoline stocks declined by 3.3 million barrels due to the busy driving season. Oil prices edged up more than 3%, with U.S. crude futures returning to above $40 a barrel.
- New Zealand rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand kept its overnight rate unchanged at 2.25% in its June meeting while some investors anticipated a rate cut. Policy officials noted there are many uncertainties around the growth prospects of global markets whereas domestically, the main worries relate to inflation expectations, continued immigration and the pressures in the housing market. The RBNZ expects inflation will reach 1.6% in two years’ time, but forecast only a 1.2% increase on one from now. The central bank is expected to cut rates to 2.00% this time.
- US Unemployment Claims: Thursday, 12:30. The number of initial applications for unemployment benefits unexpectedly increased by 3,000 to 269,000 for the week ended July 30, but the growth trend in the labor market remains healthy. Economists expected claims to reach 265,000. The level of claims remained below the 300,000 threshold for 74 consecutive weeks. Since the job market is near full employment, there is limited scope for further declines in claims. The four-week moving average of claims rose 3,750 to 260,250. The number of claims is expected to reach 272,000 this week.
- Eurozone: German GDP data: Friday, 6:00. German economy expanded by 0.7% in the first quarter of the year after a small 0.3% growth reported in the final three months of 2015. The ECB’s easing measures which were formerly criticized by German officials, may have played a part in this rapid growth. The economy defied the financial market turmoil at the start of the year as well as the Chinese slowdown. However, the growth streak has ended in March and April as German consumers started to save again. Germany’s rebalancing towards domestic demand is positive after being too reliant on exports. German GDP is expected to grow by 0.3% in the second quarter.
- US Retail sales: Friday, 12:30. U.S. retail sales were upbeat in June, suggesting consumer spending becomes a more central force of growth in the second half of 2016. Retail sales edged up 0.6% following a mere 0.2% rise in May, revised down from an earlier estimate of 0.5% growth. Sales excluding autos rose 0.7% after posting 0.4% in May. Consumer spending strongly rebounded after a slow start to the year. Sales were up 1.4% in the second quarter compared with the first three months of the year. Economists expect retail sales to gain 0.4% in July while core sales are expected to rise 0.2%.
- US PPI: Friday, 12:30. U.S. producer prices registered their biggest increase in a year as the cost of energy products and services increased in June, suggesting inflation pressures are starting to build up. In the 12 months through June, the PPI increased 0.3%, rising for the first time since December 2014, after dropping 0.1% in May. Energy prices jumped 4.1% in June after rising 2.8% in May. Prices for services edged up 0.4% after gaining 0.2% in May. Producer prices are expected to gain 0.1% this time.
- US Prelim UoM Consumer Sentiment: Friday, 14:00. US consumer moral declined in July after taking in Britain’s surprise vote to leave the European Union. The Index dropped to 89.5 in July’s preliminary reading, following 93.5 posted in the previous month. Economists expected the reading to increase to 93.7. The index of current economic conditions posted 108.7, down from 110.8 in June. Consumer expectations hit 77.1, from 82.4 in June. Analysts expect sentiment will rebound in July and early August. consumer sentiment is expected to rise to 1.5 in August.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
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