Forex Weekly Outlook July 18-22

A very busy week saw the pound stage a recovery but erode the gains while the yen was the back foot. The upcoming week features UK Inflation and employment data, the ECB's rate decision, US housing figures and more. These are the main events on forex calendar. Here is an outlook on the market-movers for this week.

U.S. retail sales exceeded estimates in June, as Americans increased their spending on motor vehicles and a variety of other goods, suggesting a rebound in growth during the second quarter. The future may be somewhat less bright with lower consumer confidence. The pound enjoyed both the quick formation of a new government in London as well as a no-cut decision from the BOE. The yen suffered talk about fiscal stimulus and even helicopter money. Let’s start,

1. UK Inflation data: Tuesday, 8:30. UK's inflation rate remained unchanged in May at 0.3% as declines in clothing offset rising transport costs. The Bank of England’s inflation target of 2% has not been achieved for more than two years. The central bank forecast, said inflation would remain under 1% until late 2016, and would stay below the 2% target until 2018. Weak energy prices have helped to cut inflation in the last two years. Food prices in the UK have also fallen due to a price-war between the major supermarkets. Analysts expect policymakers will issue economic stimulus to increase inflation. UK inflation is expected to rise 0.4% this time.
2. German ZEW Economic Sentiment: Tuesday, 9:00. Analysts’ mood has improved unexpectedly in June, rising to 19.2 from 6.4 in May, beating the forecast of 5.1. The survey showed confidence in Germany’s economy despite global headwinds. Current conditions index increased to 54.5 from 53.1 in May. However, general economic conditions remain challenging, mainly the EU referendum in Great Britain which causes uncertainty. Economic sentiment is expected to decline to 8.2 this time,
3. US Building Permits: Tuesday, 12:30. The number of US building permits edged up 0.7% in May, reaching a 1.14 million-unit rate. U.S. housing starts declined in May as the construction of multi-family housing units fell, but the recent gains in building permits suggest a rebound in the second quarter. US building permits are expected to rise to 1.15m in June.
4. UK Claimant Count Change: Wednesday, 8:30. The number of unemployed in the UK contracted in May by 400 to 746,100, following a 6,400 increase in the previous month. Public sector employment increased by 6,000. However, governmental positions declined to a record low of 2.2 million. Private employment increased by nearly half a million over the past year to 26 million. Despite the optimistic figures, economists warn from risks following the Brexit and the slowing economy. The UK unemployment rate has fallen to 5%, the lowest since October 2005. The total number of unemployed is expected to rise by 4,100 in June.
5. US Crude Oil Inventories: Wednesday, 14:30. U.S. crude oil stocks fell by 2.5 million barrels last week, while economists expected a 2.3 million drop. Distillate inventories rose the most since January and gasoline stocks also increased unexpectedly despite the busy driving season. The higher than expected stocks in the midst of the U.S. driving season is expected to push prices down in the coming weeks.
6. Eurozone Rate decision: Thursday, 11:45. The European Central Bank kept key interest rates unchanged for the second consecutive month, maintaining the deposit rate at -0.40% and the headline rate at 0.00%. The decision was in line with market forecast. The central bank upgraded its growth and inflation forecasts for this year to 1.6% from 1.4%, but warned of downside risks from the global economy the Brexit. President Mario Draghi said he expects economic growth will continue at a moderate but steady pace.
7. US Philly Fed Manufacturing Index: Thursday, 12:30. The Philadelphia Fed manufacturing index improved in June, posting the second positive reading in the past ten months. The index increased to 4.7 from minus 1.8 in the previous month, exceeding market forecast for a 1.1 gain. New orders remained negative at -3.0 compared to May’s minus 1.9. The employment index also showed a drop of 10.9 in June, much worse than the prior decline of 3.3. Philly manufacturing index is estimated to rise to 5.1in July.
8. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits remained unchanged at 254,000, while expected to rise to 263,000. This week’s release continues the streak of jobless claims below 300k for the 71 consecutive weeks, the longest since 1973. The four-week moving average declined by 5,750 to 259,000 from last week. The number of continuing claims increased by 32,000 to 2.149 million from the prior week.  A broader look suggests The US employment market continues to improve with last week’s monthly jobs report  showing 287,000 job gains and wages on the rise. The number of jobless claims is expected to rise 271,000.Building Permits

That's it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.