ForexBall Education: Major market moving events for 31st week of 2015

Author Anil Panchal Category Fundamental Analysis 28 Jul 2015 Updated at 12:26 CET
Last week, disappointment from data pertaining to new home sales, coupled with the weaker than expected earnings from major US firms, superseded the upbeat existing home sales data and a surprisingly multi-decade low jobless claims, pulling back the US Dollar Index (I.USDX) towards a first weekly loss in previous five. Selling at the commodities front kept scolding the antipodean currencies, namely AUD, CAD and NZD while negative reading of monthly UK Retail Sales, coupled with no votes favoring a monetary policy change, dragged the GBP lower. Moreover, despite an interest rate cut by the RBNZ, NZD rebounded from multi-year lows to finish the week higher against the dollar and the safe haven demand kept supporting the JPY.

Looking forward, the current week, that already flashed better than expected US Durable Goods Orders and the preliminary reading of UK GDP, has many important events scheduled to fuel considerable forex market moves. However, FOMC decision and second-quarter GDP readings from the US, coupled with US CB Consumer Confidence and the Euro-zone Flash CPI y/y, are likely to dominate this week's economic calendar. Let’s briefly discuss these important events.

Key US Events To Watch

After the data pertaining to durable goods orders, published on Monday, supported optimistic views of a steady US economic recovery, market players would likely to closely observe each detail from US to determine chances of interest rate hike in its September meeting.
 
CB Consumer Confidence Index, a leading indicator of consumer spending, scheduled for release on Tuesday, is expected to reveal a bit of pullback in consumer optimism, as the numbers is expected to mark 100.1 against prior 101.4. However, numbers relating to Pending Home Sales and the Chicago PMI, scheduled to release on Wednesday and Friday respectively, supports extended USD up-move as forecasts relating to the housing number signals a 1.2% improvement against 0.9% prior while the Chicago PMI is expected to reverse its prior decline below 50 level to 50.2 mark.

Wednesday and Thursday are the two important days for the US and for the rest of the global economy as FOMC will end its two-day monetary policy meeting on Wednesday while the US Bureau of Economic Analysis is scheduled for announcing first estimate of US economic growth (GDP) for the second-quarter of 2015 on Thursday.

Even if the FOMC is not expected to announce any major policy changes, neither do we have press conference by the Fed Chair, which generally follows the rate announcement, central bank's projection to start normalizing its monetary policy in 2015 can keep making market players busy looking for optimism in meeting release to determine chances of Fed’s next move.

Moreover, the GDP releases is likely to provide a bit more of the bull support to the greenback if it meets the forecasts as consensus estimating the reading to show US economy growing by 2.6% in the second-quarter after registering 0.2% contraction during Q1 2015.

As majority of the headline numbers signaling an improvement in US economy, speculations concerning Fed moving closer to the first rate-hike in over six-years could gain momentum, supporting the medium-to-longer term strength of the US Dollar.

Euro-zone CPI and German Details

Flash reading of Euro-zone CPI, for the month of July, and Unemployment Rate for the month of June, both scheduled for release on Friday, together with the Wednesday’s GfK German Consumer Climate and the Thursday’s German Prelim CPI m/m, are likely European details that investors will closely scrutinize this week. While the German Consumer Climate Index signals a mild improvement of 10.2 from 10.1 and the German CPI indicating a reversal of its prior -0.1% by a +0.2% mark, the EU Flash CPI is expected to remain static at 0.2% while the unemployment rate, although bears consensus for a marginal drop, but is expected to remain elevated at 11.0%. Hence, majority of the EU details still support need of extra lose monetary policy and expectations relating to weaker Euro can’t be denied should the actual releases match forecasts.
 
Releases To Affect AUD Moves

With on-going rout of commodity declines, coupled with pessimism spread from Chinese equity plunge, Australian details relating to Building Approvals and PPI q/q, scheduled for Thursday and Friday respectively, in addition to the Saturday’s official figure of Chinese Manufacturing PMI, could provide meaningful information to forecast near-term AUD moves.

The Australian Building Approvals are likely to register -0.9% figure against previous growth of 2.4% while the PPI could well signal another weaker reading, supporting the AUD decline. Moreover, Chinese PMI is expected to mark 50.2 reading and could provide additional weakness to the AUD should the actual reading plunges below 50 mark.

Economics From Rest of The Globe

Other than the important releases from US, Euro-zone and the Australia, monthly releases from Japan, New-Zealand and Canada are also important to determine near-term market moves.

Japanese numbers relating to Household Spending, CPI and Unemployment Rate, scheduled for Friday release, favor a bit of pullback into the JPY as the Household Spending is expected to print 2.0% growth after 4.8% registered prior month while the CPI reading is likely being 0.0% against 0.1% previous mark and the Unemployment Rate bears the forecast of being at 3.3%. Should the current pessimism over commodity basket fades and the Japanese releases match their forecast or disappoints the market, the JPY is likely to witness a negative weekly close while optimistic numbers, coupled with weaker Chinese and commodity marks, can help the Japanese currency extend its upward trajectory.

Recent rate cut by the RBNZ seems fading its importance, signaling another one on the card. Hence, a weaker reading by the New-Zealand ANZ Business Confidence that plunged into negative territory for the first time since March 2011 could extend the NZD slump.

At the Canadian front, monthly reading of GDP numbers, scheduled for Friday as well, together with the updates from China and Crude prices, become important to predict CAD moves. Even if the GDP number is likely to reverse its previous two months of decline with the 0.0% mark, only a reading above 0.0% can help the CAD gain a pullback into its current downturn.
 
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