After pushing higher earlier in the week, the US dollar eventually finished the week lower. A speech by Ben Bernanke, employment data from NZ, Australia and Canada together with the US trade balance, are the main events this week. Here is an outlook on the most influential releases for the coming days.
The ECB refrained from taking immediate action to try and stop the economic deterioration in the EU, and didn’t live up to the expectations he created. However, he clearly hinted on bond buying in the next few weeks, even full QE. This depends on the governments. After Spain opened the door, the mood improved. In the US Non Farm Payrolls gained an unexpected 163,000 new jobs while the unemployment rate increased to 8.3% Will we see Draghi take action in the coming weeks and will the US job market lower expectations for QE3? Let’s Start
- Ben Bernanke speaks: Monday, 13:00. Federal Reserve Chairman Ben Bernanke speaks in a prerecorded video about economic measurement before the 32nd General Conference of the International Association for Research in Income and Wealth in Cambridge, Massachusetts. His words cause volatility in the markets. He may add some insights on the recent decision not to change policy (but to express heightened worries).
- Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia maintained its cash rate at 3.5% as predicted since inflation is contained within its target range, but the global outlook has worsened. The RBA lowered its interest rate twice in the last 4 moths to help boost an economy amid weaker global outlook. Australian economic figures suggest the economy has expanded in the first part of 2012. The same rate will be maintained.
- Ben Bernanke speaks: Tuesday, 18:30. Federal Reserve Chairman Ben Bernanke will speak in Washington open to audience questions on the need of financial education in the wake of the recent financial crisis. This speech can make a big impact on the market.
- UK inflation report: Wednesday, 9:30. Sir Mervyn King Governor of the BOE warned against the worsening conditions in the EU and its affect of the struggling UK economy, saying there is no simple solution to the biggest banking crisis the UK has ever known. King predicts London Olympics will boost the UK economy and inflation would fall back to its 2% target by the end of the year. The BoE didn’t steal the show, and left policy unchanged after the recent QE expansion.
- NZ employment data: Wednesday, 22:45. The New Zealand unemployment rate jumped to 6.7% in the first quarter from 6.4% in the fourth quarter of 2011. The rise was above the 6.3% predicted by analysts. However reconstruction activity in Canterbury suggests a pick up trend in NZ job market. Meantime NZ gained 9,000 jobs in the first quarter rising 0.4% compared to 0.2% rise in the previous quarter, although the increase was less than the 0.5% growth predicted. Participation rate grew to 68.8% in the first quarter from 68.2% in the previous quarter. All in all, the situation looks encouraging. A 0.4% expansion is expected in the number of new positions while unemployment rate is expected to drop to 6.5%.
- Australian employment data: Thursday, 1:30. Australian market unexpectedly lost 27,000 jobs in June a probable reaction to the strong 27,900 gain in May. The majority of job loss was in Full time positions. Meanwhile unemployment rate increased slightly to 5.2% from 5.1% following this unpredicted job loss. These weak figures suggest EU debt crisis affects hiring inAustralia. The job market is expected to add 10,300 new jobs while unemployment rate is predicted to increase to 5.3%.
- Japanese rate decision: Thursday. A new voice is starting to be hear among Japan’s Policy Board members. Two new members called for additional monetary easing at a news conference on July 24 claiming the 1.0% target inflation rate will not be attained in fiscal 2014 in the current economic constellation. However analysts believe these two new voices will not change the BOJ’s policy as long as the other members remain cautious. No change in rate is forested, and the yen will likely benefit.
- US Trade Balance: Thursday, 12:30. The United States trade deficit improved in May to 48.7 billion from $50.6 billion in April, due to cheaper oil that lowered imports and an increased exports to Europe and China. However due to weaker global conditions US GDP growth forecast is not expected to improve. Another improvement to $47.4 billion deficit is predicted this time.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing applications for unemployment benefits increased less than predicted last week reaching 365,000 from 357,000 in the week before, still influenced by the annual auto shutdowns. It is predicted that the US job market will continue to behave sluggishly in light of global uncertainties. A rise to 371,000 claims is anticipated this time.
- Canadian employment data: Friday, 12:30. The Canadian employment market expanded by7,300 jobs in June after adding 7,700 jobs in May. The rise was well above the 5,100 addition anticipated by analysts indicating the job market continues to improve. Meanwhile Unemployment rate dropped from 7.3% to 7.2% in June amid stronger hiring. Job market is expected to expand by 10,200 new jobs while unemployment rate is predicted to reach 7.3%.
- US Federal Budget Balance: Friday, 18:00. The U.S. government contracted its budget deficit of $60 billion in June from 125 billion in the previous month. Total deficit reached $904 billion for the first nine months of fiscal 2012. Federal government spent $320 billion in June, 9.2% above the same month last year while receipts rose 4% to $260 billion. A sharp increase to $103 billion is expected in the Federal Budget deficit.
*All times are GMT.
That’s it for the major events this week. Stay tuned for coverage on specific currencies.