Forex Weekly Outlook July 27-31 – Will US GDP be a disaster?

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The upcoming week features GDP and inflation numbers. US second-quarter growth will be in focus, with analysts expecting a drop of some 35%. If this forecast is accurate, we could see some significant volatility late next week.

EU leaders defied many of the naysayers after marathon talks, hammered out a deal with regard to the massive EUR 750 billion recovery fund. Under the agreement, the EU will allocate 390 billion euros worth of grants and 360 billion euros worth of loans in order to stabilize the struggling eurozone economy.

In the UK, the Manufacturing and Services PMIs both improved, with readings of 53.6 and 56.6, respectively. A reading above 50.0 indicates expansion.

For the first time since April, US weekly unemployment claims were higher than the previous week. Last week’s reading of 1.41 million was up from 1.30 million. Analysts had expected jobless claims to remain steady at 1.3 million. The US Manufacturing PMI has been showing contraction for the past four months, with readings below the 50-level. Still, the index has been moving upwards and showed strong improvement in June, climbing from 39.8 to 49.6. The upswing continued in July, with a reading of 51.3, but this was shy of the forecast of 52.0.
  1. Bank of Japan Summary of Opinions: Sunday, 23:50. This report will provide a glimpse into the view of bank members as to the health of the economy.
  2. US Durable Goods Orders: Monday, 12:30. Durable goods orders bounced back in May, with a sizzling gain of 15.8%. The estimate for June stands at 7.0%. The core release improved to 4.0% and the June forecast is 3.5%.
  3. Federal Reserve Rate Decision: Wednesday, 18:00. No change is expected in the benchmark rate of 0.25%, so investors will be keeping a careful eye on the rate statement. A pessimistic tone from policymakers could sour investors on the US dollar.
  4. German Preliminary GDP: Thursday, 8:00. The eurozone’s largest economy contracted by 2.2% in Q1, and investors are bracing for an abysmal release in Q2, with an estimate of -9.0%. A sharp decline could send the euro lower.
  5. US Unemployment Claims: Thursday, 12:30. After a disappointing read last week of 1.41 million, unemployment claims are again expected to rise, with a forecast of 1.45 million. 
  6. US Advance GDP: Thursday, 12:30. Analysts are projecting a staggering decline of 35% in GDP in the second quarter. Traders should be prepared for some volatility from the US dollar after this release.
  7. German Preliminary CPI: Thursday, All Day. Inflation rebounded nicely in June, with a gain of 0.6%. The previous reading was -0.1%. The estimate for July stands at -0.2%.
  8. French Flash GDP: Friday, 5:30. France’s economy slipped by 5.8% in Q1 and is projected to plunge by 15.2% in Q2, as Corvid-19 has caused massive disruption to the eurozone economy.
  9. German Retail Sales: Friday, 6:00. Retail sales rebounded with a gain of 13.9%, after back-to-back declines. However, another decline is expected in the upcoming release, with a forecast of -3.0%.
  10. Eurozone Inflation: Friday, 9:00. Eurozone CPI posted a gain of 0.3% in June and no change is expected in the initial July reading. The core reading is expected to remain pegged at 0.8%.
  11. Canada GDP: Friday, 12:30. Canada’s GDP nosedived in April, with a decline of 11.6%. However, there have been signs that the economy is recovering and the May forecast stands at 3.3%. A solid gain could give the Canadian dollar a boost.
  • All times are GMT

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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