Forex Weekly Outlook: Central banks, job data on the menu

The upcoming week features central bank announcements in the UK and Australia. We’ll also get a look at key employment releases out of the US and Canada.

In the eurozone, GDP fell by 12.1% in Q2, after a decline of 3.8% beforehand. German consumer inflation fell by 0.5%, its second decline in three months. Canada’s GDP bounced back nicely in June, with a gain of 4.5%. This followed a dismal decline of 11.6% beforehand.

The Federal Reserve maintained the benchmark rate at zero and had a dovish market for the markets, as expected.  Policymakers reiterated their commitment to “act as appropriate to support the economy”, but did not announce any new policy measures.

The initial US GDP read for Q2 was dismal. The economy contracted by 32.9%, close to the estimate of 34.5%. The week ended with UoM Consumer Sentiment falling to 72.5, down sharply from 78.1 beforehand.

1. Japan GDP: Sunday, 23:50. The Japanese economy is already in recession, and the upcoming GDP release is expected to be a third straight decline. The forecast for Q2 GDP stands at -0.7%.
2. RBA Rate Decision: Tuesday, 4:30. The RBA is projected to maintain interest rates at 0.25%, where they have been pegged since March. Investors will be paying close attention to the tone of the rate statement. Recent statements from senior government officials have acknowledged that the economy is struggling, and a dovish message from the RBA could dampen enthusiasm for the Aussie.
3. US ISM Manufacturing PMI: Monday, 14:00. The PMI jumped to 52.6 in June, up from 43.1 beforehand. The upswing is expected to continue, with an estimate of 53.6. A reading over the 50-level indicates expansion.
4. US ISM Non-Manufacturing PMI: Wednesday, 14:00. The services sector showed strong expansion in June, with a reading of 57.1. The July forecast stands at a respectable 55.0.
5. BoE Financial Stability Report: Thursday, 6:00. The Bank of England publishes its thorough report on financial stability twice a year. Apart from the details on banks, the BOE also makes available some economic assessments which are relevant to monetary policy.
6. BoE Rate Decision: Thursday, 11:00. With the British economy still grappling with the devastating effect of Covid-19, the BoE is expected to maintain the official bank rate at 0.10%. Investors will be keeping a close eye on the quarterly monetary policy report, which will include inflation and economic growth forecasts.
7. RBA Monetary Policy Statement: Friday, 1:30. The RBA releases a policy statement each quarter. A dovish statement could sour investors on the Aussie, which has sparkled against the greenback in recent months.
8. Canada Employment Report: Friday, 12:30. The economy created almost a million jobs in June, with a reading of 952.9 thousand. This was up sharply from 289.6 thousand in May. Will we see another strong gain in the July release?
9. US Employment Report: Friday, 12:30. Wage growth has dropped in the US for two straight months. Another decline is expected in July, with an estimate of -0.5%. The economy created 4.8 million jobs in June, but this is expected to slow to 1.5 million in July.

• All times are EDT