Fundamental Analysis by Admiral Markets

[Admiral Markets]

A Week Full Of Top-Tier Economic Releases

Last week's optimistic US details, mainly in the form of Core Durable Goods Orders and housing market numbers, again fuelled speculations that the Fed's interest rate hike could be anytime near September, supporting the US Dollar Index to complete its first weekly gain in previous four. Moreover, the Final reading of Q1 2015 GDP matched forecast of -0.2% against its initial estimations of -0.7%, providing additional strength to the USD bulls. The Greece finally failed to agree with its international creditors during weekend talks and imposed capital controls on its banking system to avoid more damages from considerable fund withdrawals. The ECB froze funding support to the Greek banks after the Greek PM announced for a July 5 referendum on spending cuts that he initially has rejected and called for additional trouble to the nation's economy ahead of its $1.7 billion scheduled IMF payment on June 30.

Including early days of the July month, current week's economic calendar offers many important events to fuel the Forex market liquidity. Amongst them, the US labor market details, Flash reading of Euro-zone CPI and PMIs from China, UK and US are some of the crucial details to determine near-term market moves. Moreover, UK GDP and some of the Australian details, coupled with the updates from the Euro-zone, are additional information that market players should take care off. Let's discuss each one of them in detail.

US NFP, Consumer Confidence And Manufacturing PMIs To Determine Near-Term USD Moves

Even if monthly reading of US labor market numbers would gain considerable attention of market players, consumer confidence, factory orders and various manufacturing PMIs, namely the ISM and Chicago PMI, could also offer important details to determine the chances of Fed's September rate hike, that in-turn helps foresee near-term USD moves.

US labor market details start commanding the economic calendar from Wednesday's ADP Non-Farm Employment Change, which is expected to print 216K against its 201K prior, signaling an improvement in US job market and supporting the immediate up-move by the greenback. However, the headline Non-farm Payrolls (NFP) and Unemployment Rate, scheduled for release on Thursday, are showing mixed signals as the NFP is expected to witness mild pullback from its three month high of 280K to 231K while the Unemployment Rate could again print 5.4% rate as compared to its 5.5% reading during previous month. Moreover, the Average Earnings are also likely to print a bit slower growth, to 0.2% from 0.3%, and could derail the optimism on matching the consensus.

Other than the labor market numbers, Manufacturing PMIs, namely Chicago PMI & ISM Manufacturing PMI, scheduled for Tuesday and Wednesday respectively, coupled with the Thursday's Factory Orders, are likely important details to help understand US manufacturing sector. While the Chicago PMI is expected to retest above 50 zone, coupled with the five month high of ISM Manufacturing PMI to 53.2 from 52.8, the Factory Orders can drag the US Dollar down as the consensus supports the print of -0.5%, five month low, as compared to prior -0.4%.

Moreover, Monday's Pending Home Sales m/m and the monthly reading of CB Consumer Confidence, scheduled for Tuesday, could also become important data points to better forecast the US Dollar trend. Barring the recent developments in housing market, Pending Home Sales is expected to register slower growth of 1.3% as compared to its prior 3.4% number while the official reading of Consumer Confidence is likely printing a three month high figure of 97.1 as against 95.4 registered during previous month.

With the headline numbers signaling an unclear picture of US economy, weaker labor market numbers, less than 200K NFP, could pullback the recent USD strength while upbeat readings of the Consumer Confidence and PMIs, coupled with better growth of Factory Orders, may help extending the greenback's upward trajectory.

Also, developments at Greece could play an important role in determining US Dollar moves as a surprise agreement between the European authorities to help the troubled nation could provide considerable strength to the Euro, providing counter weakness to the USD.

Greek Saga And The Flash Reading Of EU CPI Could Direct The Euro

Even though the Greek PM announced referendum for spending cuts and blocked the banking sector, should it able to pay the June 30 IMF tranche of $1.7 billion, chances are higher that the IMF could continue helping it in future. Moreover, a surprise decision by the European authorities, during the Tuesday's Eurogroup meeting, to again discuss the Greek aid program, with the much easy demand, could also dim the chances of Grexit and can also provide considerable strength to the regional currency Euro.

Also, Flash reading of Euro-zone CPI, scheduled for release on Tuesday, may direct near-term Euro moves. The number is expected to print 0.2% reading against its previous 0.3% mark and could provide additional weakness to the Euro.

UK GDP & Headline PMIs May Plot The GBP Up-Move

With the absence of major economics, the UK currency trimmed some of its recent gains during last week. However, final reading of UK Q1 2015 GDP and Current Account details, scheduled for Tuesday, in addition to the Manufacturing and Construction PMIs, scheduled for Wednesday and Thursday respectively, are likely to strengthen near-term GBP moves. The GDP number is expected to print a bit of upbeat number, to 0.4% as compared to its interim estimates of 0.3%, while the Current Account can register a lower deficit to -23.7B against its prior reading of -25.3B. Moreover, the Manufacturing and Construction PMIs bears the consensus of showing three month high figures of 52.6 and 56.6 respectively against their previous marks of 52.0 and 55.9. With each positive reading from UK, chances of the BoE getting closer to interest rate hike become stronger, supporting the GBP up-move.

Important Details From China and Australia

Official reading of Chinese Manufacturing PMI, coupled with the Final reading of HSBC Manufacturing PMI, scheduled for Wednesday release, can provide important insights to determine moves of commodity currencies, namely AUD, NZD and CAD. Moreover, Australian details, namely Wednesday's Building Approvals, Thursday's Trade Balance and the Retail Sales m/m scheduled for Friday announcement, could offer additional information to better determine the AUD moves.

While the official Manufacturing PMI from China is expected to test 2015 high by registering 50.3 mark, against its 50.2 prior, the final reading of HSBC PMI may remain stagnant near 49.6. Should both these numbers reveal an expansionary reading above 50, commodity currencies and industrial world could have a reason to rally. The Australian Building Approvals is expected to reverse its previous decline of -4.4% by registering 1.1% advance and the Trade Balance can show a decline in deficit to -2.21B comparing its -3.89B prior while the expectations concerning Retail Sales growth to 0.5% comparing its earlier 0.0% mark, also support an AUD up-move.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Brief Outlook Of This Week’s Major Economic Events

Even if Thursday's lesser than forecast NFP numbers disappointed USD traders, the US Dollar Index (I.USDX) completed last week with consecutive second winning streak as improvements in Consumer Confidence and ISM Manufacturing details, together with the pessimism surrounding Greece, supported the greenback demand. During the weekend, Greek referendum revealed 61% voters rejecting their international creditors' demands, providing considerable support to their political leaders in discussing aid for reform deal with greater power. However, EU authorities haven't shown any signs of making compromises with what they initially demanded and have called for meeting on Monday to discuss further way out for the troubled nation. The GBP couldn't enjoy better than forecast PMIs and GDP readings while the JPY remained firm as uncertainty over the global markets supported safe haven demand of the Japanese currency.

In addition to the talks concerning Greek existence into the Euro-zone, which is likely to cover majority of market discussions, minutes of recent FOMC meeting, monetary policy meeting by the RBA and the labor market numbers from Australia and Canada, coupled with UK Trade Balance, Manufacturing Production and Annual Budget Release, are likely to provide considerable Forex moves during the current week. Let's discuss each one of them in detail.

Fewer US Details To Track

With majority of important details being published during the first week of the month, the current week has fewer US events/announcements scheduled for release; however, monthly details of Trade Balance and the minutes of recent FOMC meeting are important details that could provide meaningful information to determine near-term USD moves.

During the recently held monetary policy meeting by the Federal Reserve, on June 17, the Fed Chair said that developments into labor markets aren't satisfactory and the committee members did cut down their near-term growth and inflation projections. However, the policy makers didn't negate possibilities of witnessing first Fed rate hike since 2006. Statement of the minutes, scheduled for release on Wednesday, is likely to reveal detailed view of policy makers and could become important to foresee chances of September rate hike. Should the minutes reveal pessimism amongst policy makers to trigger interest rate hike, chances are higher that the greenback could liquidate some of its recent gains while major emphasis on practicing the interest rate hike during current year can help US Dollar extend its recent upward trajectory.

Monthly readings of ISM Non-Manufacturing PMI, scheduled Monday, and Trade Balance, scheduled for Tuesday release, are likely showing mixed results as the service gauge is expected to rise to 56.5 against 55.7 prior while trade numbers are likely revealing larger trade deficit worth of -42.8B against previously noted -40.9B, and could pullback the USD gains. Moreover, weekly Jobless Claims, scheduled for Thursday, signals a pullback from its five week high of 281K to 277K and can help the greenback witness strong sessions should the actual number matches the forecast or declines below that.

Important Events On Australian Economic Calendars Help Determine AUD Moves

Having executed second interest rate cut in its monetary policy meeting during May, the Reserve Bank of Australia (RBA) isn't expected to alter its current monetary policy on its meeting scheduled for Tuesday. However, recent pessimism from China, coupled with weaker fundamentals, could force the central bank being a slightly dovish and can help weakening the AUD. Moreover, the Australian Employment details and Chinese Inflation readings, scheduled for Thursday, are likely to become decisive to determine AUD moves.

Source: TRADING ECONOMICS | 300.000 INDICATORS FROM 196 COUNTRIES​

Looking from the statistics, the overall unemployment have come down during 2015 the figures relating to Employment Change have been volatile, causing problems for the AUD. These figures this time showing signs of weaker labor market growth during the month of June as the Unemployment Rate is likely to increase to 6.1% against previously reported 6.0% while the Employment Change is also signaling weaker addition, 0.1K, compared to prior reading of 42.0K. With both the headline numbers signaling weaker expectations, chances are higher that the AUD could continue its downtrend against majority of its counterparts; however, a surprisingly strong numbers could help the commodity currency trim some of its recent losses.

On the other hand, Inflation releases from China, largest trading partner of Australia, also become important in forecasting AUD moves. The CPI numbers is expected to strengthen to 1.3% versus its previous 1.2% while the PPI reading is likely remaining stagnant at -4.6%. Should these figures signal upbeat figures, the AUD can witness additional support to counter its recent declines.

Greek Discussions To Decide Euro Fate

Recently announced Greek referendum results, signaling majority of Greeks in support of "No" vote to EU austerity demand, provided noticeable strength to their political leaders in discussing aid for reform deals with international creditors. However, the creditors, EU, ECB and IMF, haven't shown signs of making compromises to their previously discussed demands while the ECB officials have called for a meeting on Monday. The Germany and France, scheduled to meet on Tuesday, are likely providing a foot ahead to help avoiding the Grexit but the decisive steps could be taken on Tuesday's EU summit meeting on Tuesday.

After witnessing the Greece referendum, coupled with recently announced resignation of Greek Finance Minister, Yanis Varoufakis, chances are higher that the EU summit could result into progressive talks and can help avoid Grexit, fueling the regional currency. However, discussions relating to pensions and tax cuts have always caused failures to agreement and can again result another failed meeting with stronger chances of Greece exiting the Euro region, providing damages to the Euro.

GBP To Witness Volatile Week

Monthly reading of Manufacturing Production m/m and Trade Balance, scheduled for Tuesday and Friday respectively, coupled with the first Annual Budget Release by the newly formed government, scheduled for Wednesday, and the Thursday's BoE meeting, are likely important events that could provide meaningful information to determine near-term GBP moves.

While the Manufacturing Production is expected to reverse its previous decline of -0.4% with 0.2% growth, the Trade Deficit is likely continue signaling higher deficit of -9.7B against previously reported -8.6B. The BoE isn't expected to alter its current monetary policy and can become a drag for the currency should it signal fears from recent upheaval in Greece. However, the Annual Budget can help boosting the national currency if it contains positive measures to support the Britain.

Hence, the GBP is more likely to witness volatile market sessions during the current week with majority importance give to the BoE and Annual Budget of the Government. Should these details signal optimism, chances of BoE getting closer to higher monetary policy strengthens and the GBP can witness considerable strength in its near-term trading sessions.

Canadian Numbers To Track

With the monthly reading of Canadian labor market details scheduled to release on Friday, coupled with Tuesday's Trade Balance and Wednesday's Building Permits, the Canadian Dollar is expected to witness volatile sessions during the current week.

While the Canadian Trade deficit is expected to shrink to -2.5B versus -3.0B prior, the Building Permits can continue its march and can help the Canadian Dollar reduce some of its losses. However, the Employment Change is likely printing a negative number of -4.5K together with higher Unemployment Rate of 6.9% against their prior readings of 58.9K and 6.8% respectively. With the recent decline in commodity prices, coupled with expected weakness in headline economic numbers, the Canadian Dollar is expected to continue its downtrend; however, surprise strength of job numbers may help the commodity currency to cut down its recent losses.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Important Releases To Continue Fueling Volatility

Even after getting the "No" vote on the creditors' bailout plan, the Greece submitted updated proposal to its international creditors during last week and maintained its top place in the news. Eventually, the European leaders managed to strike a deal for Greek bailout on early Monday; though, agreed reforms seems to be tougher than initial demands and pulled back the Euro after initial spike. At the US front, FOMC minutes revealed that the policy makers were satisfied with the recent economic developments, paving way for the interest rate hike during this year; however, weaker than forecast Trade Balance, coupled with four month high Jobless Claims pushed the US Dollar Index (I.USDX) to finish the week with marginal loss. Moreover, commodity currencies, namely AUD, NZD and CAD, also weakened against majority of its counterparts as plunge in Chinese markets dimmed growth prospects of these commodity driven economies.

Recent flow of forex market volatility, triggered by the Greek deal, is likely to be stretched during the rest of the week as handful of economic readings/announcements, mainly from major central bankers, could continue making forex traders busy.

Yellen's Testimony, CPI, Housing Market Details, Retails Sales And Many More To Fuel The Greenback Moves

After the recent release of FOMC minutes, market players are likely to put more emphasis on Testimony by the Fed Chair, Janet Yellen, during Wednesday and Thursday, in order to determine chances of near-term Fed rate hike. Moreover, the monthly figure of Retail Sales, on Tuesday, together with the inflation numbers, scheduled for Friday, can provide additional information relating to whether the Fed has enough support to pull the interest rate trigger.

With the recent spike in CPI to 0.4%, market players are likely to hike their expectations of near-term interest rate increase on witnessing higher figure; however, the forecast suggest a bit of slow down into the actual number to 0.3%, giving more room for the rest of the consumer centric details to help determine chances Fed's rate hike. Moreover, the PPI, scheduled for Wednesday, is also likely to witness a slower growth, to 0.2% against 0.5% prior, increasing more downside pressure on the greenback.

Retail Sales, that rallied to nearly five year highs in its previous release, by printing 1.2%, is also likely to slow down a bit by registering 0.4% growth during the month of June; though, an index showing the Preliminary reading of Consumer Sentiment, scheduled for Friday release, signals no change into consumer confidence with the actual figure expected to mark 96.7 against upwardly revised 96.1 prior.

Manufacturing Indices, namely Empire State Manufacturing Index and Philly Fed Manufacturing Index, scheduled for release on Wednesday and Thursday respectively, are showing mixed signs as Empire State number is likely to reverse its previous negative -2.0 number with a positive 3.4 mark while the Philly reading is expected to slow down a bit from its 2015 high of 15.2 to 12.1 level. Moreover, number signaling housing market strength, namely Building Permits and Housing Starts, scheduled for Friday, are also likely to keep posing unclear results as the Building Permits indicates fewer permits granted, to 1.11M against previously revised down 1.25M, while the Housing Starts can print 1.09M against its previous 1.09M.

Even if major details lack clarity to signal US economic strength, in-turn indicating chances of near-term rate hike, a strong CPI number, accompanied by improvement in the Retail Sales, could help market players put additional bets on USD up-move.

In addition to the quantitative details, half-yearly Testimony by the Fed Chair, scheduled for Wednesday and Thursday becomes important to foresee Fed's next move. Recent improvements in growth numbers, retail sales and inflation readings, could help the Fed chair spell some of the positive words to committees of House Financial Services and Senate Banking. However, the Fed Chair can say worrisome statements on labor market improvements, signaling wait for the interest rate hike to be better. Hence, lack of required improvements in the US labor market, if signaled, can become a reason for the short-term US Dollar decline while absence of revealing such pessimism can help the Fed Chair spread optimism for the Fed's interest rate move, helping the greenback register additional gains.

Central Bankers' Moves

Other than the Fed Chair's Testimony, monetary policy meetings by the Bank of Japan, Bank of Canada and the European Central Bank are some of the announcements by the major central bankers that the market players would take serious note of.

Even if the Bank of Japan and the Bank of Canada are less likely to alter their current monetary policy, during its meeting on Wednesday, press conference by the central bank Governors, following the rate announcement, can provide meaningful information to determine respective moves of JPY and CAD. While recent declines in Crude prices can be discussed as a drag for CAD, signaling a more support to BoC's loose monetary policy, the BoJ is more likely to spread optimistic words in support of recent JPY strength, helping another gain series by the Japanese currency. However, receding tensions in Greece and a halt in Chinese markets' plunge can hurt the safe haven demand of the JPY.

Although, monetary policy meeting by the European Central Bank (ECB), scheduled for Thursday, is expected to remain as a non-event, recent weakness into economic readings can help the ECB President, Mario Draghi, spell some cautious words, providing weakness to the Euro. Moreover, the Greece, even after getting deal run, can find it difficult to match with creditors' demand and can provide additional downside to the regional currency.

Important Releases From UK and Rest Of The World

Alike US, the UK economic calendar also has important details, mainly CPI and labor market numbers, scheduled to publish during the current week while Chinese GDP and Industrial Production, coupled with Canadian Manufacturing Sales and CPI, could continue provide considerable Forex moves.

Monthly reading of UK CPI, scheduled for release on Tuesday, and the job numbers, scheduled for Wednesday, are likely to help determine the near-term GBP moves. While CPI and the Unemployment Rate are likely to remain unchanged at 0.1% and 5.5% respectively, plunge in Claimant Count Change, to -9.3K against -6.5K prior, coupled with expected five year high of Average Earnings, to 3.3% from 2.7%, can help sustain the GBP rally. With the headline numbers supporting the sustained improvements in UK labor markets, an increase in UK CPI can strengthen chances of BoE's nearness to interest rate hike, supporting near-term GBP up-move.

After the recent plunge in Chinese capital markets, details of Chinese GDP q/y and Industrial Production y/y, scheduled for Wednesday, could become important to determine near-term moves of commodity currencies, namely, AUD, NZD and CAD. With both the headline numbers signaling a weaker reading, supporting a slowdown into the Chinese economic growth to 6.9% from 7.0% and the weaker industrial production growth to 6.0% from 6.0% prior, chances of extended weakness of the commodity currencies can't be denied.

At the Canadian front, monthly reading of CPI, scheduled for Friday, is expected to keep hurting the CAD as the figure is expected to slow down to 0.2% against 0.6% prior. However, the Wednesday's Manufacturing Sales is likely reversing its previous decline of -2.1% by a positive 0.4% reading and can help limit the CAD downside.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Fewer But Meaningful Releases To Fuel The Forex Market

With the German parliamentary approval to Greece bailout, receding tensions of Grexit helped shifting market attention from Euro-zone crisis to the divergent monetary policies of global leaders. Last week, during the semi-annual testimony on monetary policy, the Fed Chair cited strengthening of the US economic recovery momentum as a cause to raise interest in 2015, fueling the US Dollar Index (I.USDX) to three month high while hawkish comments from the Bank of England (BoE) Governor, Mark Carney, that UK interest rates could rise sooner than expected, helped the GBP test highest level since 2007 against its European counterpart. Commodity currencies, namely AUD, CAD and NZD, witnessed considerable downsides as weakness in commodity prices, coupled with surprise rate cut by the Bank of Canada (BoC), fueled concerns that the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) will follow the same suit soon. Moreover, the Bank of Japan (BoJ), by downgrading inflation and growth forecasts in its recent monetary policy, eroded some of the recent JPY gains.

Looking ahead, this week's lighter US economic calendar, including monthly details of existing and new home sales, may restrict big moves but can keep supporting positive sentiment for the US Dollar. However, important releases from other global economies, including monetary policy meeting of the RBNZ and the minutes of recent BoE and RBA meetings, UK Retail Sales, Australian CPI and PMI releases from EU and China, might provide momentum in the Forex market. Let's briefly discuss each of these market moving events scheduled during the current week.

US Housing Market Data-Points

Having witnessed impressive figures of housing starts and building permits during last week, details of Existing and New Home Sales could provide additional information to determine strength of the US housing market. Existing Home Sales, scheduled for release on Wednesday, is expected to register one more strong number, 5.40M compared to 5.35M prior, testing the highest level since September 2013 while figures relating to New Home Sales, scheduled for Friday release, can register a small slide in June to a seasonally adjusted annual rate of 543K against previously reported 546K. Comments from the Fed Chair rejuvenated USD bulls that are to gain momentum with improving housing market details, discrepancies in actual numbers, if any, can only trigger pullback into the broader USD upward trajectory unless the figures are drastically negative.

UK Retail Sales and BoE Meeting Minutes To Trigger GBP Volatility

Recent comments from the BoE Governor highlights importance of BoE meeting minutes, generally considered to be a non-event, while Retail Sales, contributing major portion of the UK GDP, can also provide meaningful signals to determine the strength of the economy and chances of near-term interest rate hike by the central bank.

Retail Sales, which remains supportive pillar of UK's economic recovery, did mark the year's highest growth, by revised 0.9% mark, in its April release; however, in the month of May, the figure witnessed a bit of pullback by registering 0.2% growth. Consensus forecast retail sales for June, which is scheduled for release on Thursday, to have advanced by 0.4% on a month-on-month basis. Moreover, minutes from BoE's latest policy meeting, scheduled for release on Wednesday, is unlikely to show any change in the number of MPC members votes' to either alter benchmark interest rates or asset purchase facility. However, with recent hawkish comments from the BoE Governor, the minutes may help determine determining the timing of a rate-hike announcement by the central bank. Improvement in the UK economics, coupled with hawkish tone of the MPC members, could continue paving way for stronger GBP; however, weaker than expected retail sales may disturb a little bit of GBP upward trajectory.

PMI Releases from EU and Germany

Fading tensions of Grexit now shifts the market players' focus towards fundamental data points of the troubled region wherein the details of Manufacturing and Services PMIs for EU and Germany, scheduled for release on Friday, could help determine near-term Euro moves. Both, manufacturing and services PMI numbers, pertaining to EU and Germany, are expected to print above 50 mark, indicating expansion in the overall business activity in the Euro-zone. Even if the PMIs are favorable to economic expansion of the region, supporting short-term EUR up-move, fears emanating from Greece's inability to sustain the international creditors' demand, coupled with broader economic weakness and ultra lose monetary policy, can continue hurting the regional currency.

Details That Could Determine AUD Moves

Plunge in commodities' market, coupled with unexpected rate cut by the BoC, triggered considerable decline of the commodity currencies, including AUD; however, flash version of Manufacturing PMI from China, Australia's largest consumer, minutes from RBA's latest monetary policy meeting and quarterly CPI data, are some of the important details that could help determine near-term AUD moves. Minutes of the July RBA meeting, wherein the central bank left its benchmark interest-rate unchanged at 2.0% but has left the doors open for further interest-rate cut action, if needed, is scheduled for release during early Tuesday. Even if the central banker didn't alter its monetary policy, it didn't retreat from signaling need of further rate-cuts. Should the minutes signal the same, the AUD is likely to witness further downside. Meanwhile, the quarterly release of CPI, scheduled for Wednesday release, remained unchanged at the two-year low of 0.2% in the first quarter of 2015 and is expected to have surged in the second-quarter to 0.8% providing a halt to recent AUD decline.

Moreover, the Flash version of Chinese Manufacturing PMI, for the month of July, is scheduled for release on Friday. The figure is likely to continue registering its run below 50 level, signaling contraction in manufacturing activity. However, the forecast is near to 50 region, 49.8, and by surpassing 50 level, deterioration in Chinese manufacturing activity is likely to fade, helping the demand for commodity currencies, especially the Australian counterpart (AUD), China's largest trading partners.

RBNZ, New-Zealand Trade Balance and the Canadian Sales' Figures

After witnessing surprise rate cut by the BoC, all eyes have turned on the monetary policy decision from the RBNZ, scheduled for Wednesday. In its June policy meeting, the RBNZ announced a surprise 25 bps cut to its benchmark interest rates, giving less room for consecutive rate-cuts. However, plunge in dairy incomes and lackluster inflation led by renewed weakness in crude oil prices, creates divide amongst market players on the possibilities of a yet another rate-cut. Hence, the monetary policy action by the RBNZ would be decisive even if it doesn't alter current monetary policy as market players will keep analyzing the rate statement to determine chances of another rate-cut. Also watch-out for New-Zealand's monthly Trade Balance data, which is scheduled for release on Friday wherein the trade surplus is expected to have shrunk to lowest in four month to 100M from its previous 350M figure.

Moreover, figures relating to Canadian Wholesale and Retail Sales, scheduled for release on Monday and Thursday respectively, can provide meaningful information to determine near-term CAD moves after the recent BoC action triggered considerable CAD downside. With the Monday's Wholesale Sales registering the lowest figure in four months, to -1.0%, Retail Sales, expected to mark a reversal of its previous -0.1% reading by a 0.4% growth figure, could help the CAD by providing a pullback in its broader downward trajectory.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

FOMC and GDP Releases to Determine Near-Term Direction

Last week's lighter US economic calendar, featuring upbeat existing home sales data and a surprisingly multi-decade low jobless claims but disappointment from data pertaining to new home sales, restricted market participants from taking big bets in the Forex market. Various factors moved the greenback in opposite direction against other major currencies. Commodities sell-off supported the buck against commodity currencies like AUD and CAD while weak UK monthly retail sales data dragged GBP lower. Meanwhile, despite an interest rate cut by RBNZ, NZD rebounded from multi-year lows to finish the week higher against the dollar. Also, lighter but mixed US economic data triggered some USD profit taking move against EUR and JPY. Summing the US Dollar performance against a basket of major currencies, the overall US Dollar Index (I.USDX) finished the week with a loss of 0.65%.

Moving forward, investors will now focus on the FOMC decision and second-quarter GDP readings from the US and UK, which are likely to dominate this week's economic calendar, along with some other economic releases in order to determine the near-term direction in the Forex market. Let's have a brief overview of some important economic events lined up during the course of the week that could also provide the required momentum in the Forex market.

The US economic calendar begins with the release of data pertaining to durable goods orders, which will be watched keenly to support the optimistic views of a steady US economic recovery. Durable and core durable goods orders data for the month of June are scheduled for release on Monday. Following a sharper than expected drop in durable goods orders in May, economists are expecting a sharp recovery with consensus forecasting the orders to have risen by 3.2%. Meanwhile, core durable goods orders, which excludes transportation items, is also predicted to register a modest growth of 0.4%.

Outcome of the Federal Reserve's two-day monetary policy meeting, starting Tuesday, happens to be this week's most awaited event for the Forex market. Although, the FOMC is not expected to announce any major policy changes from this week's meeting, scheduled on Wednesday. However, given the central bank's projection to start normalizing its monetary policy in 2015, market participants expect the Fed to sound optimistic in its monetary policy statement, which would further strengthen the expectations of an eventual interest rate hike in its September meeting.

Meanwhile, the government is scheduled to release the first estimate of US economic growth for the second-quarter of 2015 on Thursday. Following a lacklustre growth of a mere 0.2% in the first-quarter of 2015, which was further revised to show a contraction of 0.2%, economists are expecting the growth momentum to resume with consensus estimating the advance estimates to show US economy growing by 2.6% in the second-quarter.

US Gross Domestic Product (GDP)

Other important economic data featuring this week's US economic calendar also include Conference Board's consumer confidence index, a leading indicator of consumer spending, for the month of July and is scheduled for release on Tuesday. Also watch-out for a forward-looking indicator of the US housing market, pending home sales, for the month of June, scheduled for release on Wednesday and Chicago PMI data for the month of July, scheduled for release on Friday.

Stronger US GDP print accompanied with this week's positive economic data will add to the expectations of continuing the strong economic growth momentum in the second half of 2015. This would add on to the speculations that the Federal Reserve could be moving closer to the first rate-hike in over six-years, resulting into a strong US Dollar for medium to long-term.

From UK, market players will be looking for the first reading of GDP growth rate for the second-quarter of 2015. The data, which is scheduled for release on Tuesday, is expected to show UK economy regaining momentum after two quarters of softer-than-expected readings. For the second-quarter of 2015, UK economy is expected to have registered a growth of 0.7%.

Also in the list of GDP releases is the Canadian GDP data, which is released on monthly basis rather than on quarterly basis, and is scheduled for release on Friday. The Canadian economy contracted for two consecutive months and this time too, falling commodity prices, especially a sharp fall in crude-oil prices, is expected to weigh on the growth number, which is expected to print a negative number showing yet another month of contraction in the economy.

Elsewhere, investors will closely scrutinize this week's preliminary Euro-zone CPI data for the month of July and unemployment rate for the month of June, both scheduled for release on Friday. The flash version of Euro-zone CPI is expected to remain subdued at 0.2% in July while unemployment rate for June, although register a marginal drop, but is expected to remain elevated at 11.0%. In addition to this, traders will also watch for Gfk German consumer climate index, scheduled for release on Wednesday.

Meanwhile, the official Chinese Manufacturing PMI data for July is scheduled for release on Saturday. Chinese manufacturing PMI data helps investors to gauge economic health of the world's second-largest economy and being World's largest consumer of commodities, Chinese economic data is always in focus for any material impact on commodity currencies, especially the Australian Dollar (AUD).

Summing it all, hawkish Fed accompanied with positive US economic data and (or) disappointing data elsewhere has the potential produce a knee-jerk reaction in the Forex market and spark a renewed investor interest to buy the US Dollar.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

PMIs, Job Details And Central Bankers To Dominate The Market Moves

Even if better than expected reading of the US Durable Goods Orders and hawkish tone of the Federal Reserve fueled chances concerning sooner lift-off to the Fed rate, record low reading of quarterly Employment Cost Index (ECI), coupled with weaker Consumer Confidence Index and Advance GDP, caused the US Dollar Index (I.USDX) to close the week in marginally negative territory. The Euro region currency kept struggling against majority of its counterparts with mixed economic readings while the GBP registered considerable gains as preliminary reading of Q2 2015 GDP favored BoE's remarks of strong economic recovery, signaling near-term interest rate hike. Commodity currencies, namely AUD, CAD and NZD, extended their declines as weaker commodity prices, mainly fueled by pessimism over China, coupled with not-so-good fundamental numbers, kept hurting their outlook.

Going forward, lots of important events/announcements are likely to make market players busy during the first week of the August. Amongst them, monthly details of headline PMI numbers from UK, US and China, monetary policy meetings by the BoJ, RBA and the BoE, together with BoE Inflation report, and the labor market details from US, Australia and the New-Zealand, are key releases to dominate the forex market. Let's discuss them in detail.

US NFP Is Amongst The Crucial Labor Market Announcements

Although, labor market details from Australia and New-Zealand are also scheduled for release during the current week, US job numbers, namely the Non-farm Payrolls (NFP) and the Unemployment Rate, scheduled for Friday release, are likely to gain considerable market attention. With recent comments from the Fed signaling the need of "some" improvement in labor market details to introduce first interest rate hike since 2006, the actual readings will help forecast whether the central bank will go for interest rate lift-off in September, or during current year or not.

In its latest release, the NFP maintained its +200K mark while the Unemployment Rate plunged to the lowest since August 2008. The figures aren't expected to print considerable moves as the NFP bears consensus of 224K and the Unemployment is likely remaining unchanged at 5.3%. With the change in Fed's tone for the improvement in labor market details, sustainably positive NFP above 200K and a near 5.00% Unemployment Rate could continue favoring chances of the Fed's September interest rate hike, fueling the USD rally; however, a surprise plunge in NFP below 200K and/or higher unemployment rate, which seems less likely to happen, can provide considerable damages to the greenback's upward trajectory. Moreover, monthly reading of ADP Non-Farm Employment Change, scheduled for Wednesday, becomes an intermediate labor market reading to help forecast the Friday's numbers. The number is likely declining a bit to 218K against its previous 237K and can provide near-term correction in USD strength should the actual figures match forecasts.

Other than the headline numbers, ISM Manufacturing and Non-manufacturing PMIs, scheduled for release on Monday and Wednesday, coupled with Wednesday's Trade Balance details, are likely additional numbers that could help determine near-term USD moves. While the Manufacturing PMI is less likely to register considerable improvement with a forecast to print 53.6 from 53.5, the Non-Manufacturing PMI is expected to test 56.4 mark against 56.00 and the Trade Deficit may have widened to -42.6B against -41.9B. Hence, improvement in PMIs could surpass negative effects of weaker Trade Balance, helping the USD maintaining its up-move.

BOE Inflation Report and PMIs To Determine GBP Moves

Recent comments from Bank of England (BoE) Governor that the central bank is closer to the interest rate hike, coupled with the improvement in Q2 2015 Preliminary GDP numbers, forces market players to focus on Quarterly Inflation Report (QIR), scheduled for release on Thursday, to look for the hints relating to the interest rate hike, that could possibly fuel considerable GBP strength. In Its May release, the BoE cut down 2015 growth forecast from 2.9% to 2.5%, together with weaker outlook for Inflation, and said that the central bank is less likely to increase their bench mark interest rate before Q2 2016; However, it did signal noticeable improvement in labor market details. Hence, an upward revision to the growth and inflation numbers and/or hawkish comments by the Governor, during his speech after the report release, strongly supports the speculations concerning near-term interest rate hike by the BoE, in-turn fueling the GBP rally.

Having witnessed better than expected UK Manufacturing PMI, to 51.9 against 51.4 prior, during its Monday release, Construction and Services PMIs, scheduled for Tuesday and Wednesday respectively, are likely to provide intermediate moves to the market prior to monthly details of Manufacturing Production and Trade Balance, scheduled to release on Thursday and Friday respectively. While the Construction PMI is expected to test five month high, to 58.6 from 58.1, the Services PMI, core to the UK GDP, signals a mild weakness in reading of 58.1 from previous 58.5. Moreover, consensus relating to the Manufacturing Production signals reversal of two month old contraction by 0.2% advance and the UK Trade deficit is likely widened to -9.1B as compared to its previous release of -8.0B. With headline numbers signaling mixed traits of UK economy, it becomes important to observe the actual details in order to better determine the GBP moves.

Bank of Japan (BoJ) Monetary Policy Meeting

BoJ Governor, in his talks with Yomiuri newspaper on Saturday, said that there's no immediate need for additional monetary easing and the economy is steadily improving towards targeted goals; however, market players don't believe him and keep expecting continuous flow of extra large monetary easing from the central bank. Though, the BoJ, in its monetary policy meeting on Friday, isn't expected to announce any changes in its current monetary policy, comments by the Governor, following the rate announcement, are likely to be observed closely to foresee near-term JPY moves. Should the central banker retreats from his favor to lose monetary policy, the JPY should witness considerable up-moves while a passive talks of the need to current policy measures could help JPY stretch its recent decline.

Details Affecting Antipodean Currencies

Alike majors, antipodean currencies, namely AUD, NZD and CAD, are also likely to witness considerable moves backed by strong fundamental details/events that starts with monetary policy meeting by the Reserve Bank of Australia (RBA) on Tuesday. Even if the central bank isn't expected to alter their current monetary policy, either a surprise rate cut or dovish lines in Rate Statement could provide considerable damages to the AUD. Moreover, the Australian Retail Sales m/m and Trade Balance, also scheduled for Tuesday release, coupled with Thursday's labor market details, could also provide considerable AUD moves. While the Retail Sales is expected to rally to four month high of 0.5%, the Trade deficit is likely widening to -3.06B against -2.75B prior. The labor market numbers, namely Employment Change and Unemployment Rate, signal mixed results as Employment Change is likely expanded to 12.5K against 7.3K prior while the Unemployment Rate bears the three month high consensus to 6.1% against 6.0% previous reading. At the Chinese front, Australia's largest consumer, Caixin Services PMI and the Trade Balance, scheduled for Wednesday and Saturday respectively, could also gain the market attention after the recent plunge in Caixin Final Manufacturing PMI to the two years low. The Services PMI is likely register an advance to 52.2 from 51.8 prior while the Trade surplus is likely rallied to 53.4b against 46.5B. Weaker details from China, coupled with absence of strong domestic numbers could continue favoring AUD downward trajectory.

New-Zealand Employment Change and Unemployment Rate, scheduled for Tuesday, coupled with the Canadian Trade Balance, scheduled for Wednesday, are the details that could help determine the respective moves of NZD and CAD. With the higher that previous unemployment rate, to 5.9% from 5.8%, and a slower growth in employment change, to 0.5% from 0.7%, recent comments from the RBNZ, that further cuts in interest rates are likely, becomes more important. Should the labor market numbers, coupled with trade details, continue favoring the need for extra loose monetary policy, RBNZ becomes even more likely to keep going in its rate cut path, providing considerable NZD decline. From the Canadian economy, monthly release of Trade Balance and Ivey PMI, scheduled for Wednesday and Friday respectively, signals mixed results as the Trade deficit is expected to shrank to -2.8B against previous -3.3B while the PMI consensus favor a print of 56.2 against prior 55.9. With the stall in trade numbers, CAD can witness a mild pullback in its on-going decline; however, weakness in Crude prices, its main export, could continue favoring the broader downturn of the Loonie, as it is nicknamed.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Fewer But Meaningful Releases To Keep Forex Players Busy

Last week's busy economic calendar provided wild moves into the Forex market. The USD liquidated some of the early week gains that were piled up by the Factory Order numbers as lesser than expected NFP provided immediate harm to the USD; however, the upwardly revised June NFP numbers, together with improvements in hours worked, restricted the losses, resulting the first in three weeks positive closing by the US Dollar Index (I.USDX). The BoE disappointed the GBP bulls as only one policy maker favored the interest rate change, against the two forecasted, while the central bank, in its Quarterly Inflation Report (QIR), tamed down chances of near-term interest rate hike with a revised down inflation outlook. Further, commodity currencies, namely AUD, NZD and CAD, witnessed mixed moves as declining Crude prices and not so good labor market numbers weakened the NZD and CAD while better job numbers, coupled with the change in RBA monetary policy statement, negating the favor for additional AUD weakness, helped the Australian Dollar register considerable gains. Moreover, the JPY resulted into a bit of weakness with Bank of Japan favoring lose monetary policy with downward revision to growth and inflation marks.

Having witnessed noticeable forex moves, the second week of August offers lesser economic details to the market players. However, EU GDP, UK job numbers and the US Retail Sales are likely statistics that could provide meaningful information to help determine near-term market direction. Let's briefly discuss them.

Consumer-Centric US Details To Help Foresee USD Moves

With the advanced numbers of Q2 2015 US GDP, coupled with better Durable Goods Orders and Factory Orders, favoring a strong economic growth during the second quarter, consumer-centric details, namely Retail Sales and Preliminary UoM Consumer Sentiment, could become helpful to better analyze the chances of strong economic rebound after witnessing growth contraction of -0.2% in Q1 2015.

Monthly reading of Retail Sales and Preliminary UoM Consumer Sentiment, scheduled for Thursday and Friday, favors an upward transition of the US Dollar as both the numbers are likely surpassing their previous marks. The July month Retail Sales is expected to reverse its June contraction of -0.3% with 0.5% mark while the consumer sentiment index bears the forecast of printing 93.5 number against the previously revised down reading of 93.1. Optimism surrounding strong economic growth is likely to be maintained with better consumer-centric numbers, favoring near-term interest rate hike speculation and the USD up-move; however, weaker readings could dilute growth numbers and force the Fed to delay their first interest lift-off since 2006, that in-turn could damage the recent greenback strength.

Other than these crucial details, the quarterly releases of Preliminary Nonfarm Productivity and Unit Labor Costs, scheduled for Tuesday, and the monthly Capacity Utilization Rate & Industrial Production, to be released on Friday, are some of the second-tier economic readings that could help determine near-term USD moves. While the Non-farm productivity has been increased by 1.6% against previous contraction of -3.1%, the unit labor cost is likely revealing first negative number of -0.1% since February 2014. Moreover, the Capacity Utilization is likely been to 78.00% compared to its previous 78.40% and the industrial production growth seems static near 0.3%. Hence, majority of the economic details favor robust US economic numbers during Q2 2015, supporting the intact speculations concerning September rate hike and the USD upward trajectory.

UK Job Numbers May Clarify GBP Trend

Even if the Bank of England, in its QIR, disappointed GBP bulls, strong growth numbers, revealed in preliminary Q2 2015 GDP, still favors the GBP up-move; however, market players would closely examine the monthly labor market details, scheduled for Wednesday, in order to get updated from the UK economic transition and the near-term moves of the Great Britain Pound.

While the UK Unemployment Rate stands near the seven years low, the recent uptick in Claimant Count Change could restrict the central bank from increasing their benchmark interest rates. The Unemployment Rate is expected to remain static near 5.6% while the claimant count change is likely advanced lesser by 1.4K against the previous rise of 7.0K, Moreover, the Average Earnings may have retreated from a 3.2% gain during June to 2.8% rise in July. Hence, weaker claimant count change may help nullify the damages done via lesser average earnings, favoring near-term GBP up-move; however, a spike in unemployment rate, which is less expected, could restrict the immediate advance by the GBP.

European Growth Numbers Could Trigger EUR Bounce

Off-late the European economic details have been mixed and failed to clarify the region's strength; however, German & EU ZEW Economic Sentiment, to be released on Tuesday, and the Flash reading of Q2 2015 GDP growth numbers, scheduled for Friday, may help generate meaningful information to base Euro trades.

ZEW indices for Germany and Euro-zone favor the EUR up-move as the German reading is likely printing 31.1 mark against 29.7 prior while the forecast relating to Euro-zone index favors 43.9 number compared to its previous reading of 42.7. Moreover, the Flash reading of EU GDP Q2 2015 GDP indicates that the region may have grown uniformly with 0.4% number marked during Q1 2015, the highest percentage since May 2011.

Other than the quantitative details, progressive talks between the Greece and its international creditors signal that the troubled nation will soon be able to secure another tranche of much required bailout package, favoring the EU optimism and immediate Euro up-move.

With the Greece near to agreement on bailout package with its international creditors, strong growth numbers from the European economy could stave-off the near-term EUR bears, providing a quick bounce to the regional currency.

Releases From The Rest Of Globe

Apart from headline numbers from EU, US and UK, recent BoJ Meeting Minutes, Australian NAB Business Confidence, Westpac Consumer Sentiment and Wage Price Index q/q, coupled with Chinese Industrial Production y/y are some other details that could help fueling the Forex volatility during the current week.

After the Bank of Japan (BoJ), in its recent monetary policy meeting, favored the currently loose monetary policy and cited the risk of further decline in growth and inflation outlook should the crude prices weaken further, market players are likely to analyze the minutes in detail to look for hints relating to weakness in Japanese economy. Should the BOJ minutes, scheduled for Wednesday release, reveal that the export oriented nation is struggling and there are more chances of additional monetary easing, the JPY could become vulnerable to extend its decline.

The Chinese pessimism have been worsening day by day and a weaker than expected reading of monthly Industrial Production, scheduled for Wednesday, cold provide additional damages to the commodity currencies and industrial world. The consensus favors a weaker industrial production growth of 6.7% against its previous reading of 6.8%. Hence, a number lesser than the 6.7% could become detrimental for commodity currencies, namely AUD, NZD and CAD.

Other than the Chinese Industrial Production, Tuesday's Australian NAB Business Confidence and the Westpac Consumer Sentiment and Wage Price Index q/q, scheduled for Wednesday, could become helpful to foresee near-term AUD moves. With the recent improvement in NAB Business Confidence, better than expected Consumer Sentiment reading and rising Wage Prices could help the AUD maintain its recent surge. However, weaker Chinese details and disappointing numbers are likely trimming the recent gains by the Aussie.




“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Inflation Figures To Become This Week's Market Catalyst

Last week's move by the People's Bank of China, to cut the daily reference rate for Yuan against US Dollar by a record 1.9%, triggered the biggest plunge of the Chinese currency in nearly a decade. The news also damaged speculations concerning an early interest rate hike by the Federal Reserve, gifting a weekly negative close to the US Dollar Index (I.USDX) ignoring the upbeat Retail Sales and PPI numbers. The Euro region currency remained a bit strong as Greece moved closer to getting its aid funds from international creditors while the Yuan devaluation reduced import burden. Moreover, the GBP showed mixed results due to not-so-good labor market numbers and the JPY remained a bit weaker as bets supporting Japanese economy is losing momentum strengthened. The Crude prices plunged to its six years' low and the commodity currencies, namely AUD, NZD and CAD, also registered noticeable declines.

The current week, that started with lesser than expected decline in Q2 Japanese GDP, is likely to be flourished by the Inflation numbers from UK, US and Canada. Moreover, Manufacturing and Services PMIs from China, US and Europe, coupled with the monetary policy meeting by the Bank of Japan (BoJ) and minutes of recent FOMC and RBA meetings, could become catalysts to determine this week's forex moves. Let's discuss these events/announcements in detail.

US CPI To Help Foresee Fed's September Move

Even if the US economic calendar has many important events/announcements to offer during the current week, starting from Monday's Empire State Manufacturing Index to Friday's Flash Manufacturing PMI, the Consumer Price Index (CPI) for July 2015, scheduled for release on Wednesday, becomes an important event to determine the Fed's much anticipated move.



US inflation still struggles near zero mark and an announcement to hike the benchmark interest rate in September could add to the current strength of the US Dollar, providing further downside to the price index. Hence, weaker inflation number, against the expected 0.2% and the 0.3% prior, may restrict the Federal Reserve from introducing its first interest rate lift-off since 2006 during the much anticipated September meeting. Moreover, the core measure, that excludes food and energy, is likely to remain stagnant near 0.2%. A lesser than forecasted reading of which, or a plunge below 0.0% mark, can also back dissenters that don't see interest rate change in September FOMC, providing additional weakness to the greenback.

Minutes of recent FOMC meeting, also scheduled for Wednesday release, can provide additional information on whether the US central banker is capable of altering their record low interest rates in September or not. Monetary policy meeting by the Federal Reserve, in July, wasn't backed by the Fed Chair's press conference and lost some of its charm; however, the FOMC statement did signal that the policy makers are welcoming the labor market improvements to trigger higher inflation and an early interest rate hike in-turn. Although, recent action by the Chinese central bank can reduce the importance of such hawkish words, even if released, and may put the emphasis back on the inflation mark to determine Fed's next move.

Other than the headline events, Empire State Manufacturing Index, scheduled for Monday,Building Permits and Housing Starts, scheduled to be released on Tuesday, Philly Fed Manufacturing Index and Existing Home Sales, scheduled for Thursday and the Flash Manufacturing PMI, to be released on Friday, are some other details that the USD traders should take care off during the current week. Amongst them, numbers showing strength of US manufacturing activity suggest better prints, signaling strong USD in-turn, while the housing market readings are flashing mixed signals, showing inability to provide clear USD signs.

UK CPI, Retail Sales and Euro-Zone PMIs To Determine GBP & EUR Trend

With the Bank of England's (BoE) Quarterly Inflation Report (QIR) failing to provide any clear signs of near-term interest rate hike, by cutting down the inflation outlook, monthly reading of UK CPI,scheduled for release on Tuesday, becomes an important number to forecast immediate GBP moves. The inflation gauge is expected to remain stagnant near 0.0% mark, strengthening the QIR forecast for lower medium-term inflation. Should the index disappoints market consensus, by being lower than expected, testing the negative territory, bulls supporting the BoE interest rate hike could be forced to take another setback, signaling GBP sliding downside. However, monthly Retail Sales, scheduled for Thursday, is also an important indicator to forecast near-term GBP moves. The main contributor for UK GDP, is likely reversing its prior 0.2% declines with the same amount of gain, +0.2%. Hence, an actual reading satisfying the consensus can trigger near-term GBP up-move.

Flash Manufacturing & Services PMIs for Germany and Euro-zone, scheduled for release on Friday, are the only releases that European calendar offers during the week. With the upward revision to previous readings, actual numbers surpassing the prior mark could provide additional strength to the immediate EUR moves. Moreover, focus would also be given to the Greece updates as the troubled nation is near to its scheduled EU debt payment, failing which may trim some of the recent Euro gains.

BoJ, RBA Meeting Minutes, Chinese Manufacturing PMI and Canadian Numbers

In addition to the US, UK and EU releases, minutes of recent monetary policy meeting by the Reserve Bank of Australia (RBA), scheduled for Tuesday, monetary policy meeting by the BoJ, on Thursday, and the Flash reading of Chinese Caixin Manufacturing PMI, scheduled to be released on Friday, are some other details that could make the market players busy during the current week.

Early during the month, the RBA surprised global markets by removing the term supporting necessary decline of AUD in addition to standing pat on its existing monetary policy. However, with the recent changes in Chinese front, its biggest consumer, only some of the strong phrases of themeeting minutes, supporting the delay of further interest rate cut, could restrict Australian Dollar's downward trajectory. Moreover, earliest estimate of Chinese Caixin Manufacturing PMI, provides more detail to foresee near-term AUD moves. Even if the release is expected to surpass downwardly revised prior reading of 47.8, by being at 48.1, market players are likely to put their AUD longs only should the actual mark surpasses the 50.00 bifurcating number.

Further, monetary policy meeting by the BoJ, is likely to provide additional JPY declines as the recent GDP number reversed previous two quarters' positive reading. However, the actual mark was lesser than the expected and a hawkish comment by the BoJ Governor, in his press conference following the meeting announcement, can help the Japanese currency recover some of its recent loses. Other than the BoJ meeting, Japanese Trade Balance, scheduled for Wednesday, becomes another important point to determine the JPY moves. The trade deficit is likely to test -0.16T mark against the previous -0.25T, providing a bit of relief to the JPY traders should the actual meets forecast.

Last but not the least, monthly details of Canadian Inflation and Retail Sales, scheduled for Friday, are important data points to help foresee near-term CAD moves. While the inflation readings, both main and the core version, are likely to remain stubborn near 0.0% mark, the retail sales figure signals weaker outlook for the Canadian currency. Moreover, the recent declines in Crude oil prices, Canada's main export item, provided additional weakness to the Loonie, as it is nicknamed.


“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Can This Week's Economic News Stall USD Decline?

Widespread unrest in the global financial markets, triggered by previous week's Chinese move to devalue Yuan, kept maintaining its effect during the last week. The Forex market, not being an exception, also witnessed considerable moves wherein safe havens, like Gold and JPY, rallied while short covering in the EUR fueled the regional currency against majority of its counterparts. The US Dollar Index (I.USDX), however, faced noticeable downside with consecutive second negative weekly closing, testing the lowest level in two months, as weaker than expected Inflation numbers and not so hawkish FOMC minutes cooled down speculations concerning Fed rate lift-off during September meeting. Commodity currencies, namely, AUD, NZD and CAD, registered heavy declines and the Crude prices plunged to the levels last seen during March 2009.

Looking forward, GDP numbers from UK, US and Switzerland, coupled with US Durable Goods Orders and Consumer Confidence, are likely to become market catalysts for the upcoming week. Moreover, US Housing market details, German Ifo Business Climate and the Preliminary CPI, together with New-Zealand Inflation Expectations q/q and Trade Balance, are likely to provide additional source of market volatility. Let's discuss them in detail.

US GDP, Consumer Confidence and Durable Goods Orders To Determine USD Fate
As weaker than expected Inflation numbers fading hopes that the Federal Reserve could opt for interest rate hike during its September monetary policy meeting, market players are likely to concentrate more on the second estimation of Q2 2015 GDP numbers in order to determine the strength of US Economy, in-turn signaling near-term USD moves.

Even if the US Inflation didn't match the mark, US FOMC members were not pessimistic, if not the hawkish, and kept supporting the first interest rate hike since 2006 during the current year. They mentioned that the labor market improvements were better and the economy is also strengthening from its previous quarterly decline of -0.2% (Q-o-Q). Should this second estimate of Q2 2015 GDPfigure, scheduled for publish on Thursday, matches the 3.2% mark, against Flash version showing 2.3% gains, speculations concerning interest rate hike in September gets stronger, favoring rejuvenation of USD Bulls. However, a weaker than expected mark, or a plunge near the prior -0.2% could threaten the US Fed policy makers from introducing interest rate hike, providing additional strength to the USD bears and forcing the greenback to test lows against majority of its counterparts.

Moreover, the official reading of CB Consumer Confidence, scheduled for Tuesday, and the monthlyDurable Goods Orders, up for publishing on Wednesday, together with details of New Home Salesand Existing Home Sales, scheduled to be published on Tuesday and Thursday respectively, are also important readings that could help determine near-term USD moves. While the Consumer Confidence index is expected to mark 92.8 mark against 90.0 number and the New Home Sales, together with Existing Home Sales, likely registering welcome numbers, to 512K v/s 482K & an increase of 1.3% compared to previous decline of -1.8%, the Durable Goods Orders are expected to mark an negative print of -0.5% against previous 3.5% growth. Also, the Core Durable Goods Orders are likely to show 0.3% increase against its earlier 0.6% revised down figure.

With the recent market behavior pushing away the September rate hike speculations, only strong economic numbers could provide life to the USD Bulls, else September lift-off seems unlikely and weaker economic marks could trigger further weakness for the greenback.

German Numbers And UK GDP Are Likely Catalyst For Near-Term EUR & GBP Moves
Recent short-covering and a relief at Greece have given considerable strength to the EUR in recent times while weakening concerns for BoE's sooner rate hike kept pulling back the GBP. This week's German numbers, mainly Ifo Business Climate and Prelim CPI m/m, scheduled for Tuesday and Friday, coupled with Friday's second estimate of Q2 2015 UK GDP reading, are likely catalyst to help determine near-term EUR & GBP moves respectively.

Index showing German Business Confidence is likely to weaken a bit from its 108.00 mark to 107.6 print while the Prelim CPI consensus favors a negative reading of -0.1% compared to +0.2% prior. Moreover, the UK GDP is likely to match its initial estimations of 0.7% growth. Hence, a negative Inflation into the Europe's largest economy and fading business confidence may dent some of the recent EUR gains while lesser than forecast UK GDP numbers could hurt the speculations concerning BoE's near-term rate hike, providing additional declines by the GBP.

Swiss GDP and New-Zealand Numbers Are The Rest To Observe This Week
Recently, uncertainty into the global financial markets have favored the safe haven demand of CHF while plunge of commodity basket kept providing additional weakness to the NZD, a commodity currency. New-Zealand Inflation Expectations q/q and the Trade Balance details, scheduled for Tuesday and Wednesday respectively, together with the Swiss GDP q/q, up for Friday release, are rest of the data points scheduled during the week to foresee near-term forex moves.

With the New-Zealand Inflation Expectations trading near record lows, 1.8% marked in February, an actual number lesser than the previous 1.9%, registered in May, can magnify the NZD weakness. Moreover, the Trade Balance is also testing the lowest levels since January and a wider deficit, as expected -600M against prior -60M, could mark the new 2015 lows of Trade numbers, triggering widespread NZD decline. The Swiss GDP number, however, is likely to ease a bit from its lowest since September 2009, the -0.2%, to the -0.1% mark and can help increase the current strength of the CHF should the actual number prints either positive mark or satisfy consensus.

“Original analysis is provided by Admiral Markets"

 

[Admiral Markets]

Crucial Week Ahead For The Forex Market



Even with the upbeat US Durable Goods Orders and GDP numbers, that fueled the US Dollar Index (I.USDX) towards registering first weekly positive closing in previous three, the greenback Index is still heading for monthly loss as US Fed policy makers are divided about the September rate hike after recent Chinese move rattled global financial markets. The Euro region currency, which declined during last week, strengthened against majority of its counterparts on a monthly basis as successful aid delivery to Greece faded speculations concerning Grexit. The GBP remained a bit sidelined with the GDP numbers matching initial forecast and BoE policy makers show less intention to start tightening monetary policy soon while the commodity currencies, namely AUD, NZD and CAD, faced considerable declines as fears emanating from their largest consumer, China, also dampened their economic prospects. On the commodity front, Crude and Copper witnessed large losses due to the Chinese move while Gold prices gained a bit of ground, supported by safe haven demand that also favored JPY prices.

The current week offers many important releases/events that could provide noticeable forex moves. Amongst them, labor market details from US, monetary policy meetings by the European Central Bank (ECB) and the Reserve Bank of Australia (RBA) coupled with the monthly PMIs from UK and US, are likely to gain major attention. Moreover, GDP numbers from Australia and Canada, together with the Manufacturing PMIs from China, are additional details that can result in busy trading schedule for the Forex market players.

US NFP To Help Determine September Lift-off

With the much awaited September FOMC just around the corner, on September 16-17, all eyes have turned on the Federal Reserve to know when the central banker of the world's largest economy adheres to first interest rate hike since 2006. Even if the recent Chinese move have damped speculation of September lift-off, stronger US economics keep pushing some of the FOMC members towards expecting an interest rate increase during this month's monetary policy meeting. However, monthly release of labor market details, scheduled during the Friday, becomes important to see whether the US economy is well in-line with the central banker's expectations that could help them tighten the monetary policy.



The US Bureau of Labor Statistics is expected to print another 200K+ NFP, 220K against 215K prior, during its Friday release while the Average Hourly Earnings bears the consensus of maintaining 0.2% growth; however, the Unemployment Rate is likely testing the lowest level since April 2008 with 5.2% mark compared to previous release of 5.3%. Other than the NFP and Unemployment rate, ADP Non-Farm Employment Change, scheduled for Wednesday, is an important labor market number as it becomes an advance signal to forecast the Friday's releases. The private sector reading is likely to print 204K mark against it 185K prior, favoring a higher NFP and can help extend recent USD up-move. Hence, stronger labor market details, coupled with recently published upbeat growth number, could provide an additional push to the policy members favoring September rate hike, in-turn supporting USD rally. However, weaker inflation reading can still continue fueling uncertainty over the September interest rate lift-off decision.

Other than the labor market numbers, Monday's Chicago PMI, Tuesday's ISM Manufacturing PMI and Thursday's ISM Non-Manufacturing PMI, coupled with the monthly details of Factory Orders m/m, scheduled for Wednesday and the Thursday's Trade Balance, are some of the additional details that could also trigger considerable USD moves. While the Trade Balance, Chicago PMI and ISM Manufacturing PMI are expected to print readings near to their prior levels, the ISM Non-Manufacturing PMI and the Factory Orders are likely posting weaker numbers to 58.3 and 0.8% against their respective previous releases of 60.3 and 1.8%. Thus, scheduled details depicting US economic situation other than the labor market favor weaker USD should they actual match forecasts.

ECB and UK PMIs To Trigger Respective Moves Of EUR And GBP

Monday's EU Flash CPI, which matched its 0.2% consensus, increased the importance of monetary policy meeting by the ECB, scheduled on Thursday, wherein the ECB President will announce the quarterly economic forecasts at a press conference. With weaker economic numbers off-late, fears of disinflation into the region have again erupted, favoring additional monetary policy easing to support Euro-zone's fragile economic recovery. Even if the central bank isn't expected to alter their current monetary policy during this meeting, downward revision to economic forecasts and/or dovish tone of ECB President could favor additional monetary easing and can magnify the EUR losses.

Having observed the Summer Bank holiday on Monday, the UK markets will resume on Tuesday with monthly details of Manufacturing PMI. Moreover, Wednesday's Construction PMI and the Services PMI, scheduled for release on Thursday, are additional indicators that can help better analyze the GBP moves. While Manufacturing PMI is expected to remain at the prior level of 51.9, PMIs relating to the Construction and the Services are likely favoring the GBP up-move with 57.6 mark compared to 57.1 and 57.4 prior.

Details from China, Australia and Canada

Manufacturing numbers from China, scheduled for Tuesday, become crucial after the Yuan devaluation provided considerable damages to the commodity currencies, especially AUD for which China is the largest consumer. The official gauge of Manufacturing PMI is expected to plunge below 50.00 level to 49.8, signaling a contraction in Manufacturing activity, while the Final version of Caixin Manufacturing PMI is likely remaining below 50.00, by marking 47.2 against 47.1 prior. Should these numbers match consensus, pessimism surrounding China could continue hurting the industrial world and the commodity currencies.

On the Australian front, monetary policy meeting by the RBA, scheduled for Tuesday, together with the quarterly reading of Q2 2015 GDP, up for Wednesday release, are crucial events that could determine near-term AUD moves. The central bank is likely to hold its monetary policy unchanged while the GDP number is expected to mark 0.4% print against 0.9% previous release. Although, lesser chances favor an interest rate cut by the central banker, a surprise rate cut and/or weaker growth numbers, observing the Chinese effect, could trigger considerable downside of the Australian Dollar.

After a pullback in Crude prices, the main export of Canada, monthly reading of Canadian GDP and the Ivey PMI, scheduled for release on Tuesday and Friday respectively, are important details that could direct immediate CAD moves. The GDP number is expected to reverse its previous -0.2% decline by the +0.2% mark while the PMI number bears the consensus of printing 53.5 mark against 52.9 prior. Moreover, monthly details depicting Canadian labor market strength, scheduled for Friday, are showing mixed signals as the Labor Productivity is likely to reverse its previous -0.1% mark with +0.1% while the Employment Change is expected to print 2.0K compared to 6.6K prior and theUnemployment rate bears the consensus of remaining unchanged at 6.8%. Hence, with the recent improvement in Crude oil better economic numbers could stall the CAD decline and help the Loonie, as it is nicknamed, recover some of its losses.


“Original analysis is provided by Admiral Markets”