Week Ahead: Trading Outlook

Key Events This Week: August 3rd – 7th

USD: PCE, ISM Manufacturing – Monday, ISM Non-Manufacturing – Wednesday, Unemployment Rate & Non-Farm Payrolls – Friday
GBP: BOE Rate Decision & Inflation Report – Thursday
AUD: RBA Rate Decision – Tuesday, Employment Change & Unemployment Rate – Thursday
NZD: Employment Change & Employment Rate – Tuesday
CAD: Unemployment Rate & Net Change in Employment – Friday

USD – Fed delivered a fairly balanced FOMC statement citing encouraging improvements in the labour markets, with the need for some further improvement to come before an increase in rates. Risks to the Fed policy forecast stil remain with falling energy and commodity prices weighing on inflation. Friday’s Q2 employment costs data saw a big miss sending USD down from the weekly highs. Monday’s PCE data will draw big attention as the Fed uses this data as a gauge for inflation, we also have key manufacturing data and finally the NFPs on Friday which have the potential to shape the course of the USD trading outlook over August ahead of that key September FOMC.
EUR – Last week the single currency met headwind supply into the 1.1130 area before recovering from the post FOMC low of 1.0890. Positive CPI data encouraged further buying on Friday which compounded the strength seen against USD weakness taking price back up to the weekly highs. With a lack of tier one domestic data, direction will be driven by headline US data.
GBP – The main story of last week for Sterling was Tuesday’s GDP print with quite a few players whispering of a softer number. However, the data came in in-line as expected and spurred GBP buying as bulls find the data supportive heading into this week’s BOE meeting. Price held the ascending trendline from the yearly low and is currently challenging stubborn resistance at the 1.5670/90 area with bulls hoping for some support from Thursday’s meeting.
JPY – Main focus last week was the CPI print on Thursday evening. With the BOJ having recently refrained from further easing, the positive CPI print will support an extension of this stance barring a shock to inflation. BOJ Policy statement and Kuroda press conference will be main focus this week.
AUD – Last week was a flat week for the Aussie which found some shallow strength on the rebound in Chinese equity markets and oil prices. Weak US data on Friday added further help to the pair though price is still heavy going into this week’s RBA meeting. Unemployment data has been improving recently and so traders will be looking to see whether this trend continues in this month’s release.
CAD – Oil price uncertainty continues to weigh on the Canadian currency and with employment data upcoming, it is possible that we start to see some of the secondary effects of the lower oil price on the Canadian economy. Weak data on Friday against stronger US data will see USDCAD continue it’s impressive bull run.

Get Our Forex Trading Course Here!