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Economic calendar: Another big week for US dollar

Summary:

  • UK manufacturing PMI together with US ISM for manufacturing should draw most of attention today
  • An avalanche of US data with the payrolls report being a cherry on top
  • Riksbank will make decisions about monetary policy tomorrow

Trade tensions between the US and China have eased somewhat after the White House decided to take a softer stance on the Chinese investments. Nevertheless, one should keep in mind how rapidly the situation is changing and the same story can be played this time, especially as new tariffs will take full effect this Friday. Even as this week is dominated by the top tier readings from the US economy one should also pay attention to the labour data from Canada as well as the Riksbank’s decision. Before we come forth with the full-week calendar let’s focus on prints for today.

9:30 am BST - UK manufacturing PMI: The index for June is forecast to slow slightly to 54 points from 54.4 previously. That said, one may suspect it is unlikely to be a significant driver for the British pound, but over the upcoming days we’ll be offered PMIs for construction and services which ought to have a larger impact. Anyway, the pound has been troubled over the recent days or even weeks, and given the latest hawkish shift within the MPC as well as reduced Brexit risks in the near-term one may expect the pound to recover from its crucial technical level.

10:00 am BST - EMU PPI and jobless rate: PPI inflation is estimated to accelerated in May to 2.7% from 2% in annual terms owing to higher oil prices, but given we have already gotten a preliminary reading of CPI for June today’s data should have neither impact on the shared currency. In turn, the unemployment rate is expected to stay at 8.5% in May.

3:00 pm BST - ISM for manufacturing: The headline is anticipated to decrease subtly to 58.1 in June from 58.7 points in a month earlier, but risks seem to be tilted slightly to the downside given the latest streak of disappointing regional indices for manufacturing. As usual, ISMs could come in handy ahead of the NFP release this Friday so employment sub-indices (both for manufacturing and services) are especially worth looking at. Prior to the ISM reading we’re going to get manufacturing PMI. In turn, at the time when ISM is released traders will be offered construction spending data as well.

What to watch for the remainder of the week?

Data from the US economy (full week): Throughout the week investors will be offered an avalanche of data from the US economy. The marathon will begin with manufacturing ISM on Monday while the non-manufacturing index will be published on Thursday. Both gauges are expected to show a slight deterioration. On Friday, what is usually the case for the first Friday of the month, the NFP report is scheduled while Minutes from the June’s FOMC meeting will be released a day earlier (Thursday). As you can see there is a lot of factors that can impact USD this week so we can be sure the volatility will be there. Affected markets: TNOTE, US500.

Riksbank decision (Tuesday, 8:30 am BST): The latest Swedish PPI inflation reading showed a strong rise in the producer’s prices. Given that the Swedish CPIF inflation has recently moved above the Riksbank’s target of 2% additional inflationary pressures may encourage central bankers to look more eagerly at monetary tightening. However, markets do not fully price in any rate hike in 2018. The decision will be accompanied by a press conference when Ingves could be asked about a possible rate hike in the last quarter. Affected markets: EURSEK, USDSEK

Payrolls from Canada (Friday, 1:30 pm BST): The latest inflation reading from the Canadian economy showed that inflation remained intact in May while it had been broadly anticipated to advance. Moreover, retail sales also disappointed showing a significant decline in April. Nevertheless, the latest hawkish comments from the Governor Poloz boosted odds for a rate hike during the next BoC meeting on 11 July. However, prior to this event we will be offered the labour market report and it may dial back the odds for a hike in case of a major disappointment. Affected markets: USDCAD, EURCAD

link do file download linkAfter drawing a double top pattern the pair came back below its trend line which could portend possible further falls. Source: xStation5

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