Weekly Outlook: 2017, July 02 - July 09

Weekly Outlook: 2017, July 02 - July 09

The US dollar and the Japanese yen were on the back foot as optimism gripped markets Will the party continue? The first week of the second half features a full build up to the all-important Non-Farm Payrolls as well as other top-tier figures.

Attachment 27540

1. Chinese Caixin Manufacturing PMI: Monday, 1:45. Any figure under 50 represents contraction. A similar score is expected now: 49.9.
2. US ISM Manufacturing PMI: Monday, 14:00. Expectations stand at 55 points.
3. Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia kept its interest rate unchanged since lowering it to 1.5% in August last year. No change is expected now. The focus is on the accompanying statement. Given the recent rise in the Aussie, Governor Lowe and his colleagues could try to talk down the currency.
4. UK Services PMI: Wednesday, 8:30. A small slide to 53.5 is on the cards.
5. US FOMC Meeting Minutes: Wednesday, 18:00. These are the minutes from the June decision, which resulted in a hawkish hike. Yellen expressed optimism about the economy, jobs and even shrugged off inflation on “one off” figures. Since then, some members have expressed concerns over slowing inflation. Will these concerns be repeated now? It is important to remember that the document is edited until the very last moment.
6. US ADP Non-Farm Payrolls: Thursday, 12:15. A gain of 181K jobs is on the cards.
7. US jobless claims: Thursday, 12:30. A small rise from 244K to 245K is predicted.
8. ISM Non-Manufacturing PMI: Thursday, 14:00. A drop from 56.9 to 56.6 is predicted.
9. Crude Oil Inventories: Thursday, 14:30.
10. US Non-Farm Payrolls: Friday, 12:30. This time, a gain of 175K jobs is expected. Wage growth is forecast to rise by 0.3% m/m after 0.2% last time. The unemployment rate carries expectations to repeat the 4.3% level seen last month.
11. Canadian jobs report Friday, 12:30. The unemployment rate stood at 6.8%.

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Weekly EUR/USD Outlook: 2017, July 02 - July 09

EUR/USD finally made a breakthrough and reached the highest levels in over a year. Is this the beginning of a longer trend? The first week of July features PMIs and the ECB meeting minutes.

Attachment 27541

1. Manufacturing PMIs: Monday morning: 7:15 for Spain, 7:45 for Italy, the final French figure at 7:50, final German read at 7:55 and the final euro-zone number at 8:00.
2. Unemployment Rate: Monday, 9:00. A repeat of this number is on the cards.
3. Spanish Unemployment Change: Tuesday, 7:00. A big drop of 120.3K is expected now.
4. PPI: Tuesday, 9:00. A slide of 0.2% is projected.
5. Services PMIs: Wednesday morning: 7:15 for Spain, 7:45 for Italy, the final French figure at 7:50, final German read at 7:55 and the final euro-zone number at 8:00.
6. Retail Sales: Wednesday, 9:00.A bounce worth 1.8% is expected.
7. German Factory Orders: Thursday, 6:00.A bounce worth 1.8% is expected.
8. Retail PMI: Thursday, 8:10.
9. ECB Meeting Minutes: Thursday, 11:30. Four weeks after the ECB decision, we get more details. In that June 8th meeting, the made small optimistic tweaks to its statement but also lowered inflation forecasts. Since then, Draghi made his Sintra speech that was much more optimistic. Will we hear some fear in the minutes?
10. German Industrial Production: Friday, 6:00. A rise of 0.4% is forecast.
11. French Trade Balance: Friday, 6:45. A narrower deficit of 5.1 billion is expected.

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Weekly GBP/USD Outlook: 2017, July 02 - July 09

GBP/USD soared last week, gaining 250 points. The pair closed at 1.3015, the first weekly close above the 1.30 level since May. This week’s highlights are the PMI reports.

Attachment 27542

1. Manufacturing PMI: Monday, 8:30. The estimate for the June report stands at 56.4.
2. BoE Governor Mark Carney Speech: Monday, 12:00. Carney will speak at the Financial Stability Board in Frankfurt. A speech which is more hawkish than expected is bullish for the British pound.
3. Construction PMI: Tuesday, 8:30. The estimate for the June reading stands at 55.2.
4. BRC Shop Price Index: Tuesday, 23:01. This indicator measures consumer inflation in BRC stores.
5. Services PMI: Wednesday, 8:30. The downward trend is expected to continue, with a forecast of 53.5.
6. Housing Equity Withdrawal: Thursday, 8:30. This indicator is an important gauge of the strength of the housing sector. The estimate for Q2 stands at GBP -7.4 billion.
7. 10-y Bond Auction: Thursday, Tentative. The estimate for June stands at 0.2%.
8. Manufacturing Production: Friday, 8:30. This key event should be treated as a market-mover. After three straight declines, the indicator posted a gain of 0.2% in April. However, this fell well short of the estimate of 0.8%. The upswing is expected to continue in May, with a forecast of 0.4%.
9. Goods Trade Balance: Friday, 8:30. The estimate for the May deficit is GBP 10.9 billion.
10. NIESR GDP Estimate: Friday, 12:00. This monthly indicator helps analysts track GDP, as the official publication is only released each quarter.
11. BoE Governor Mark Carney Speaks: Friday, Tentative. Carney will speak at the G-20 summit in Hamburg. The markets will be looking for clues regarding possible rate hikes by the BoE.

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Weekly USD/JPY Outlook: 2017, July 02 - July 09

Dollar/yen drifted to the upside, as the Bank of Japan was left alone as the most dovish central bank. Has the downtrend channel been broken for good? We are still within the wider range: 108.10 to 114.30, but higher.

Attachment 27543

1. The upcoming week opens the second half of the year and it’s with a bang. We have a full build up to the US Non-Farm Payrolls, with a small break for the 4th of July festivities. And, the Fed releases its meeting minutes, which may be somewhat less optimistic than the statement.
2. In Japan, the Tankan indicators are worth mentioning: these are released on Sunday at 23:50 GMT. However, as usual, the US indicators will drive the pair more than anything else.

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Weekly AUD/USD Outlook: 2017, July 02 - July 09

AUD/USD reversed directions last week and gained 110 points. The pair closed at 0.7683. This week’s key indicators are Retail Sales and the RBA rate statement.

Attachment 27544

1. AIG Manufacturing Index: Sunday, 19:30
2. MI Inflation Gauge: Sunday, 21:00. The indicator provides analysts with a monthly look at inflation, as CPI is released each quarter. In May, the indicator softened to 0.0%, down from 0.5% a month earlier.
3. Building Approvals: Sunday, 21:30. The forecast for the June report is -1.2%.
4. Chinese Caixin Manufacturing PMI: Sunday, 21:45. Chinese indicators are closely watched, as they can have a strong impact on the Australian dollar. In May, the index dropped to 49.6, pointing to slight contraction in the manufacturing sector. The estimate for June stands at 49.9.
5. Commodity Prices: Monday, 2:30. Commodity prices have been showing smaller gains, with a reading of 32.6% in May.
6. Retail Sales: Monday, 21:30. This key event should be treated as a market-mover. The estimate for the May report stands at 0.3%.
7. RBA Rate Statement: Tuesday, 00:30. The RBA is expected to maintain the benchmark rate at 1.50%, where rates have been pegged since July 2016. Analysts will be monitoring the rate statement for the bank’s assessment of the health of the Australian economy.
8. Trade Balance: Wednesday, 21:30. The surplus is expected to increase to A$1.11 billion in the May report.
9. AIG Construction Index: Thursday, 19:30.

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The Canadian dollar sparkled last week, as USD/CAD plunged 300 points. The pair closed at 1.2946, its lowest weekly close since August 2016. This week’s key event is Employment Change.

Attachment 27545

1. Manufacturing PMI: Tuesday, 9:30. The indicator continues to point to expansion in the manufacturing sector, but dipped to 55.1 in May. Will the index rebound in the June report?
2. Trade Balance: Thursday, 8:30. This was weaker than the estimate of C$0.0 billion.
3. Building Permits: Thursday, 8:30. In April, the indicator declined 0.2%, well off the forecast of +2.4%.
4. Employment Change: Friday, 8:30. This is the key event of the month. In May, the indicator sparkled with a gain of 54.5 thousand, crushing the forecast of 11.5 thousand. Will we see another strong gain in June? The unemployment rate remained at 6.6% in May, matching the forecast.
5. Ivey PMI: Friday, 10:00.

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