Weekly Market Outlook: FOMC & NFP

The week ahead will mark the start of August. As a result, this week’s economic calendar will see a pickup in activity towards the second half. The data from the United States will be of particular importance as it includes the Fed meeting, payrolls, and data from the ISM.

On the economic front, the data from the Eurozone will cover monthly manufacturing and services PMI. The report covers the month of July and will show whether the Eurozone’s economy has been able to recover from the slump in the first half of the year.

Australia will be reporting on its quarterly inflation data this week. Expectations show that consumer prices might have advanced 1.5% during the three months ending June.

This increase comes amid higher fuel prices. There were similar trends in inflation across many other economies as well. Following the inflation report, on Friday, Australia’s monthly retail sales report will be coming out. Retail sales are forecast to rise at a higher pace of 0.2% during the month, from 0.1% previously.

Finally, Canada will also be reporting on the monthly trade balance figures. The data will showcase how Canada’s GDP might have performed during the month of June. This will give key information as investors adjust their expectations for Canada’s second-quarter GDP.

Canada’s imports are forecast to dip moderately while exports are expected to remain much lower. This could lead to a possible narrowing of trade balance data. In May, Canada’s trade balance was at 0.76 billion. Forecasts show that the balance could fall 1.50 billion in June.

Here’s a quick recap of what’s to come in the currency markets this week:

FOMC, ISM Manufacturing, and Payrolls to Keep USD Busy

A busy week lies in wait for the US dollar. The week starts off with Wednesday’s Federal Reserve monetary policy meeting. The FOMC will be deciding on cutting interest rates at this week’s meeting. Following an aggressive rate hike cycle, this will be the first-rate cut. The Fed funds rates will be cut from 2.50% to 2.25%.

The Institute of Supply Management will be reporting on the monthly manufacturing PMI numbers on Thursday. The ISM’s manufacturing index forecast remains optimistic and could rise to 52.7 in July. This follows an uptick from 51.7 in the month before. Manufacturing activity, as seen from the various regional indicators suggest a modest rebound, although underlying factors remain weak.

On Friday, the US nonfarm payrolls report will be released. Forecasts for the payrolls show an increase of 160k in July. This follows a 220k figure reported in June. While this figure is due for revision, the rebound in June’s payroll report indicates a possible strength in the labor market.

The unemployment rate in the US is expected to fall to 3.6% from 3.7% previously. Meanwhile, the average earnings are forecast to rise at a steady pace of 0.2% on the month.

BoE to Remain on the Sidelines

The Bank of England will also be holding its monetary policy meeting this week. But the FOMC meeting due on Wednesday will still overshadow the BoE’s meeting. Still, the BoE is unlikely to make any changes to monetary policy.

The Bank of England’s meeting comes amid a change of leadership in the UK parliament. With Boris Johnson now at the helm, the prospect of a no-deal Brexit has increased. BoE’s Carney is likely to remain on the sidelines until there is more clarity on the UK’s Brexit deal with the EU.

Besides their meeting, economic data from the UK is relatively quiet for the most part of the week. The BoE will be considering the uptick in the average earnings and a rather stable rate of inflation. This could potentially keep the officials on the sidelines.