Forecasting the coming week: ECB decision, UK inflation, and global PMIs to drive markets

Agustin Wazne FXStreet

The upcoming week will be dominated by the European Central Bank’s (ECB) interest rate decision, United Kingdom (UK) inflation and labor market figures, and preliminary global Purchasing Managers Index (PMI) data. Australian employment, New Zealand inflation and Canadian CPI figures will also attract attention.

The US Dollar Index (DXY) trades slightly higher near 100.80 after mixed United States (US) economic releases. The United States (US) calendar will be relatively light, leaving the Greenback sensitive to Federal Reserve (Fed) expectations, global risk sentiment, and developments in energy markets.

US Initial Jobless Claims are expected to rise slightly to 212K from 208K on Thursday. On Friday, attention will turn to the preliminary S&P Global PMIs and New Home Sales. The previous Composite PMI stood at 51.9, with Manufacturing at 53.9 and Services at 51.2. Stronger activity figures could support the US Dollar, while weaker data may extend its recent loss of momentum.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.06%	0.17%	0.03%	-0.20%	0.20%	-0.00%	-0.15%
EUR	-0.06%		0.12%	-0.04%	-0.28%	0.16%	-0.06%	-0.22%
GBP	-0.17%	-0.12%		-0.17%	-0.40%	0.02%	-0.17%	-0.35%
JPY	-0.03%	0.04%	0.17%		-0.23%	0.18%	-0.04%	-0.19%
CAD	0.20%	0.28%	0.40%	0.23%		0.42%	0.21%	0.06%
AUD	-0.20%	-0.16%	-0.02%	-0.18%	-0.42%		-0.22%	-0.38%
NZD	0.00%	0.06%	0.17%	0.04%	-0.21%	0.22%		-0.16%
CHF	0.15%	0.22%	0.35%	0.19%	-0.06%	0.38%	0.16%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

EUR/USD trades lower near 1.1440 ahead of a busy Eurozone calendar. German producer inflation will be released on Monday, followed by Germany’s ZEW surveys and the European Central Bank (ECB) Bank Lending Survey on Tuesday. German Economic Sentiment is expected to improve to 18.0 from 10.5, while the Current Situation Index is forecast to rise to -77.8 from -81.0.

The ECB is expected to leave its Main Refinancing Operations Rate unchanged at 2.40% and the Deposit Facility Rate at 2.25% on Thursday. Investors will closely examine the policy statement and press conference for guidance on inflation and possible additional rate increases. Friday’s preliminary French, German and Eurozone PMIs will provide further evidence about the region’s economic momentum.

GBP/USD trades lower near 1.3450 with Sterling facing several important domestic releases. Tuesday’s labor report is expected to show earnings excluding bonuses rising 3.4%, while earnings including bonuses are forecast to increase 4.5%. Employment is projected to rise by 100K, with the Unemployment Rate remaining at 4.9%.

UK inflation follows on Wednesday. Core CPI is expected to ease to 2.5% YoY from 2.6%, while headline inflation previously stood at 2.8%. Retail Sales and preliminary PMIs will be released on Friday. A hotter inflation or wage report could strengthen expectations that the Bank of England (BoE) will maintain restrictive policy, while weaker employment and consumption figures may pressure the Pound Sterling.

USD/JPY holds near 162.50, keeping markets attentive to the possibility of intervention by Japanese authorities. Japan’s trade report is expected to show exports rising 18.6% YoY and imports increasing 21.0%, with the overall trade deficit narrowing to approximately ¥120 billion.

Japanese inflation will also be closely watched later in the week. CPI excluding fresh food is forecast to rise 1.6% YoY, up from 1.4%. Stronger inflation could support expectations of additional Bank of Japan (BoJ) tightening and offer some relief to the Japanese Yen.

AUD/USD trades lower near 0.6980 ahead of Wednesday’s Australian labor market figures. Employment is expected to increase by 15K in June, slowing sharply from the previous 40.3K gain, while the Unemployment Rate is forecast to remain unchanged at 4.4%.

Australian preliminary PMIs will follow on Thursday. The previous Composite PMI stood at 50.4, with Manufacturing at 51.5 and Services at 50.5. China’s interest rate decision on Sunday will also be relevant for the China-sensitive Australian Dollar, with the People’s Bank of China expected to keep its benchmark rate unchanged at 3.0%.

West Texas Intermediate (WTI) Oil trades near $82 per barrel, rising almost 3% as geopolitical risks keep supply concerns elevated. Oil will remain sensitive to developments in the Middle East and preliminary global PMIs, which could influence expectations for future energy demand.

Gold advances near $4,015, supported by geopolitical uncertainty and demand for defensive assets. However, stronger global activity or inflation figures could lift government bond yields and limit the precious metal’s recovery.

Anticipating economic perspectives: Voices on the horizon

Tuesday, July 21:

ECB’s Nagel

Friday, July 24:

ECB’s Lane

Central banks meetings and upcoming data releases

The People’s Bank of China will announce its interest rate decision on Sunday, July 19, with the benchmark rate expected to remain unchanged at 3.0%.

The ECB will announce its monetary policy decision on Thursday, July 23. The Main Refinancing Operations Rate is expected to remain at 2.40%, while the Deposit Facility Rate is forecast to stay at 2.25%. The policy statement will be followed by ECB President Christine Lagarde’s press conference.

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

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