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Weekly Forecast – July 3


Date of publication: July 3, 2017 | Author: Tim Clayton

The US economic data and comments from Federal Reserve this week will be an important factor in helping determine whether the US continues to raise interest rates.

Comments from other global central bank officials will also be an important focus during the week.

The most likely outcome is that the dollar will regain some support after recent selling pressure, but there will be firm buying of the Euro on any significant retreats.

There will be some value in buying the dollar against the Euro and Sterling, but only on a short-term view.

US

There are important US economic data releases during the week which will have a significant impact on expectations surrounding interest rates.

The ISM manufacturing data will be released on Monday with the non-manufacturing release on Thursday with the data very similar to PMI release.

For further details on PMI indices see: https://en.wikipedia.org/wiki/Purchasing_Managers%27_Index

The main focus will be on Friday’s crucial employment report with an immediate focus on the non-farm payrolls data. There will also be data on average earnings and unemployment.

The data will give important evidence on likely US growth trends which will be crucial for dollar sentiment. Federal Reserve policies will also be an important element during the week with the release on Wednesday of minutes from June’s Federal Reserve meeting where the Fed raised interest rates.

On Friday, the text of Fed Chair Yellen’s testimony to Congress will also be released with the appearance in Congress due the following week. The minutes and testimony will provide important evidence on the Fed’s confidence in the economy and the degree of confidence in raising interest rates further. In basic terms, strong data and Fed confidence would strengthen the dollar while weak releases and increased Fed caution over the outlook would undermine the dollar. It might be a good time to buy USD before this expected increase if you need to send money abroad.

UK

This will be another important week for Sterling. Any further comments from Bank of England officials will be an important focus, after the remarks from Governor Carney and Chief Economist Haldane which suggested that interest rates could be increased before long.

As far as economic data is concerned, there are the important PMI releases during the week. The PMI releases for manufacturing, construction and services sectors will be released. These surveys are from company purchasing managers and provide important evidence on confidence over the outlook.

Weak data would increase concerns surrounding the economic outlook and also suggest that political uncertainty has had an impact in undermining sentiment.

Strong data would boost expectations that overall economic conditions are still favourable.

Euro-zone

There are no major economic data releases during the week and the ECB will be the main focus with markets looking for further evidence on whether and when the central bank will raise interest rates.

The latest ECB minutes will be released and markets will also be on alert for any comments from key central bank officials. A confident tone from the central bank would support the Euro.

International

The Reserve Bank of Australia will announce its latest interest rate decision with strong expectations that the central bank will leave interest rates on hold at 1.50%.

The Canadian employment data will be the last major economic release ahead of the Bank of Canada’s interest rate decision the following week.

The G20 Summit meeting will be held on July 7-8th in Germany. The Summit is guaranteed to grab headlines across the world with a clash between President Trump and European leaders, especially over trade.  A hostile atmosphere would tend to weaken global equity markets.

 

Forecasts

Currency pair Spot 1-week forecast 1-month forecast
EUR/USD 1.142 1.130 1.150
USD/JPY 112.2 111.8 110.5
EUR/GBP 0.877 0.882 0.870
GBP/EUR 1.140 1.134 1.149
GBP/USD 1.302 1.281 1.322
AUD/USD 0.768 0.770 0.755
USD/CAD 1.298 1.310 1.285
USD/SGD 1.377 1.380 1.372
USD/HKD 7.807 7.800 7.800
NZD/USD 0.733 0.740 0.745
GBP/JPY 146.1 143.3 146.1
GBP/AUD 1.694 1.664 1.751
GBP/NZD 1.776 1.731 1.774
GBP/SGD 1.793 1.768 1.814
GBP/HKD 10.16 9.993 10.31
GBP/CHF 1.247 1.236 1.264

 

 timTim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including Investing.com and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics. 

 

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Information expressed in this article and on MoneyTransferComparison.com as a whole does not constitute as financial advice. If you decide to make any actions based on the information you read, we shall not be held responsible.

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