Forex Today: A busy week ahead, and it's not all about central banks

Next week, the focus will be on central banks as the Fed, ECB, and BoJ announce their monetary policy decisions. However, that's not all. Inflation figures from the US, Australia, and Europe will also be closely watched, along with global PMIs and US Q2 growth data.

Here is what you need to know for next week: 

The week will kick off on Monday with the July preliminary PMIs. Generally, the manufacturing sector is expected to remain in contraction territory, while the services sector is expected to expand at a slower pace. These numbers will offer the first glimpse of global economic activity during the current month.

After a relatively quiet Tuesday in terms of economic data, during Wednesday's Asian session, Australia will release the Consumer Price Index (CPI) for June and the second quarter. This is a key measure ahead of the Reserve Bank of Australia (RBA) meeting on August 1st.

Later on Wednesday, the Federal Reserve (Fed) will announce its monetary policy decision. A 25 basis point rate hike is priced in, and the focus will be on the statement and Chair Powell's press conference. This event will trigger sharp moves across financial markets, even if it delivers as expected: a rate hike with the continuity of a hawkish bias.

As the markets continue to digest the FOMC decision, on Thursday, the European Central Bank (ECB) will announce its decision. Also, a 25 basis point rate hike is priced in, and President Lagarde is expected to signal that more rate hikes are likely. How strong the message regarding more tightening will be critical. The next ECB meeting is in September, and it may be too far away to have a clear perspective on what may happen there. However, the expectations will be relevant and should weigh on the EUR/USD.

Also on Thursday, the first reading of US growth performance during the second quarter is due, which is expected to expand at an annual rate of 1.6%, below the 2% of Q1. The report includes the Core Personal Consumption Expenditure for the second quarter. At the same time, the weekly Jobless Claims report and Durable Goods Orders for June are due. Considering the ECB meeting and the bulk of economic data from the US, Thursday is set to be another volatile day.

On Friday, more economic data is due from Australia with the Producer Price Index (Q2) and June Retail Sales. The key event during the Asian session will be the Bank of Japan (BoJ) decision. However, not much is expected from the central bank. A report from Reuters mentioned that despite accelerating inflation in Japan, the central bank is leaning towards leaving the yield curve control strategy unchanged.

The preliminary July inflation CPI from European countries will start to come out on Friday with Spain and Germany, with a slowdown expected on annual rates. That day, also US inflation data is due in the US with the Employment Cost Index for Q2 and the Core Personal Consumption Expenditure Price Index for June (however, no surprise will be expected considering that it is included in the GDP report due the day before). Canada will report monthly GDP growth (May).

During the week, more companies, including Microsoft, Alphabet, Meta Platforms, and Amazon, will report earnings which could weigh on market sentiment

Currency performance 

The US Dollar was among the top performers during the week, after the sharp decline of the previous week, supported by US economic data. The DXY rebounded from under 100.00, retaking 101.00. However, the outlook remains negative, and the positive results could be seen as a corrective movement. The next decisive leg will likely start following the FOMC meeting.

The Pound underperformed during the week following a bigger-than-expected drop in UK inflation. However, inflation remains elevated, and more rate hikes from the Bank of England (BoE) are expected. GBP/USD suffered the worst weekly result since January, retracting from one-year highs above 1.3100 to 1.2850. EUR/GBP posted the biggest weekly gains since January, but it was unable to break above the 20-week Simple Moving Average (SMA) and the 0.8700 area. The cross finished around 0.8650, and risks appear tilted to the upside, but the Euro needs to break and hold above 0.8700.

EUR/USD gave up half of last week's gains after retracting from one-year highs at 1.1275 toward 1.1100. The trend remains bullish, and the decline is seen as a correction.

USD/JPY rebounded at the 20-week SMA, rising back above 140.00 and erasing most of the previous week's losses. The Japanese Yen dropped sharply on Friday after reports suggesting the Bank of Japan won't signal a change in July.

The loonie underperformed among commodity currencies, even after the decline in inflation in Canada. USD/CAD ended flat, hovering around 1.3200/20.

Upbeat employment data from Australia boosted the AUD/NZD, which rose from 1.0730 to 1.0900. However, the stronger US dollar pushed the AUD/USD back to the 0.6720 area from near 0.6900. It is slightly above the 20-day SMA.

The Turkish Lira was the worst performer during the week, not helped by the 250 basis point rate hike from the Central Bank of the Republic of Turkey, which was below expectations. USD/TRY posted a record weekly close slightly below 7.00. The Colombian peso and the South African rand were the biggest gainers.


Like this article? Help us with some feedback by answering this survey:

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content

Recommended content

Editors’ Picks

AUD/USD remains on the defensive below 0.6450, investors await Australian CPI data

AUD/USD remains on the defensive below 0.6450, investors await Australian CPI data

AUD/USD remains on the defensive near 0.6420 during the early Asian session on Monday. The Federal Reserve media blackout went into effect at midnight Friday. Nonetheless, the US central bank has delivered hawkish messages in recent weeks and markets expect the first cut in September. 


EUR/USD touches five-month low on growing expectations that ECB will ease before Fed

EUR/USD touches five-month low on growing expectations that ECB will ease before Fed

EUR/USD managed to counter a poor start of the week and reverse course despite the European currency slipping back to the 1.0600 key support against the US Dollar, or five-month lows.


Gold holds below $2,400 on Fed hawkish comments, eyes on geopolitical risks

Gold holds below $2,400 on Fed hawkish comments, eyes on geopolitical risks

Gold price attracts some sellers around $2,385 on Monday during the early Asian trading hours. The hawkish comments by Federal Reserve officials have capped the precious metal’s upside. However, the escalating tensions in the Middle East might boost safe-haven assets like gold. 

Gold News

A breakout or significant price movement may be imminent for Ripple’s token

A breakout or significant price movement may be imminent for Ripple’s token

Ripple has been range-bound for a while, with token holders patiently holding as the ecosystem contended against the US Securities and Exchange Commission. As per a recent report, the payments token’s price has been stuck below $0.50, failing to breach key resistance levels.

Read more

Week ahead: US GDP and BoJ decision on top of this week’s agenda

Week ahead: US GDP and BoJ decision on top of this week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap. Earnings season heats up as tech giants report.

Read more