Forex - Weekly outlook: July 9 - 13

Investing.com - The safe haven U.S. dollar turned sharply higher against almost all of its major counterparts on Friday, as expectations for further easing measures by the Federal Reserve faded while concerns over the outlook for global economic growth dampened risk sentiment.

The Bureau of Labor Statistics said on Friday that the U.S. economy added 80,000 jobs in June, below market forecasts for a gain of around 90,000.

April figures were revised to 68,000 from 77,000 jobs, while May's numbers were revised to 77,000 from 69,000.

The report also showed that the U.S. unemployment rate held steady at 8.2% in June, in line with expectations.

Although the employment report was weaker than expected, many investors said it was not bad enough to spur the U.S. central bank to launch a third round of quantitative easing.

Meanwhile, a series of stimulus measures by world central banks added to global growth concerns.

The euro fell to a two-year low against the greenback on Friday, a day after European Central Bank President Mario Draghi said that the economic outlook faces downside risks, adding that indicators for the second quarter point to weakening growth in the euro zone.

Draghi said that there was probably a "renewed weakness in economic growth" in the last three months, with "heightened uncertainty". Draghi refused to speculate on the chances of a third round of Long Term Refinancing Operations, which provides cheap loans to European banks to encourage them to lend.

The comments came after the central bank cut its benchmark interest rate to a record low 0.75% in July, in a bid to bolster faltering growth in the region.

The pound also came under pressure after Bank of England policymakers voted to increase the stock of asset purchases financed by the issuance of central bank reserves by GBP50 billion to GBP375 billion, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.

The bank also left the benchmark interest rate unchanged at 0.5%, where it’s stood since March 2009, in a widely expected move.

Elsewhere, China surprised traders by cutting interest rates for the second time in less than a month on Thursday, signaling that growth is slowing more than Beijing expected.

In the week ahead, investors will be closely watching ECB President Draghi’s testimony before the European Parliament, on Monday, as well as a two-day meeting of euro zone finance ministers, amid expectations for a final agreement on aid for Spanish banks.

Markets will also be eyeing the minutes of the Fed’s latest policy meeting as well as U.S. data on trade balance and unemployment claims.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Monday, July 9

Japan is to publish government data on the country’s current account as well as on core machinery orders, a leading indicator of production. Meanwhile, Australia is to release industry data on job advertisements.

In the euro zone, a report by Sentix research group is to be produced on investor confidence, a key indicator of economic health. ECB President Draghi is also due to testify before the European Parliament, in Brussels.

Later in the day, the Bank of Canada is to publish its quarterly Business Outlook Survey, an important indicator of economic health. 

Euro zone finance ministers are to meet in Brussels for a first day of talks.

Tuesday, July 10

The New Zealand Institute of Economic Research is to release a report on business confidence, followed by industry data on house price inflation, an important signal of the housing industry’s health. Meanwhile, Australia is also scheduled to release a report on business confidence.

The U.K. is to produce industry data on retail sales as well as on house price balance, a leading indicator of housing inflation, followed by official reports on manufacturing production and trade balance, the difference in value between imported and exported goods. The country is also to release preliminary data on second quarter economic growth, later in the day.

In the euro zone, official data is to be produced on French industrial production.

Meanwhile, euro zone finance ministers are to hold a second day of talks in Brussels.

Also Tuesday, Canada is to publish industry data on housing starts, a leading gauge of economic health.

Wednesday, July 11

Japan is to release government data on tertiary industry activity, an important indicator of economic health.

Australia is to publish a report by the Westpac Banking Corporation on consumer sentiment, a leading indicator of consumer spending, followed by official data on home loans, an important gauge of demand in the housing market.

In the euro zone, Germany is to hold a 10-year government bond auction.
 
Later Wednesday, Canada and the U.S. are to release official data on trade balance. The U.S. is also to produce official data on crude oil stockpiles, followed by the minutes of the Federal Reserve’s most recent policy-setting meeting. The minutes will be closely watched for signs of future monetary policy decisions by the central bank.

Thursday, July 12

Australia is to publish a report by the Melbourne Institute on inflation expectations, followed by official data on employment change and the country’s unemployment rate.

The Bank of Japan is to release its monetary policy statement as well as the overnight call rate. The decisions will be followed by a press conference, which will be closely watched as investors expect the bank to implement further monetary easing measures to counter the effects of the strong yen.

In the euro zone, official data is to be produced on industrial production, while the ECB is to release its monthly bulletin, which reveals the statistical data that the central bank’s Governing Board evaluated when making the latest interest rate decision. ECB President Draghi is also scheduled to speak later in the day.

Meanwhile, the U.K. is to hold a 10-year government bond auction.
Also Thursday, Canada is to produce official data on new housings price inflation, a key indicator of the housing industry’s health.

The U.S. is to publish government data on unemployment claims and official data on import prices, followed by the monthly Treasury statement.

Friday, July 13

Switzerland is to release official data on producer price inflation, a leading indicator of consumer inflation.

The U.S. is to round up the week with government data on producer price inflation and a preliminary report by the University of Michigan on consumer sentiment.