Following Fed Chair Powell's speech, the focus for the next week will shift back to economic data. The job market indicators (including NFP) and inflation numbers will be crucial before the September FOMC meeting. Additionally, Australia and the Eurozone will release their inflation reports. The market will also pay attention to the Chinese PMI.
Here is what you need to know for next week:
The US Dollar Index recorded its sixth consecutive weekly gain, reaching a multi-month high above 104.00. The strength of the US economy continues to bolster the US Dollar. While the US economy shows signs of softening, other economies face more challenging circumstances. This divergence in the outlook is a significant factor supporting the USD.
The US Treasury yield curve showed mixed moves, with a decline in the 30-year yield and the 2-year yield posting its highest weekly close since 2007. Market participants are not anticipating further rate hikes from the Federal Reserve, and the likelihood of rate cuts next year has diminished. Stocks experienced a decline as market sentiment remained cautious due to a complex outlook characterized by slowing growth and higher interest rates.
Next week, market participants will continue to pay attention to central bankers' statements. Federal Open Market Committee (FOMC) members have been sending mixed signals. The Federal Reserve is data-dependent, and currently, economic indicators allow for potential future interest rate hikes, which would be appropriate if inflation proves to be more resilient and heats up.
The release of the US Core Personal Consumption Expenditures (PCE) Index on Thursday will be necessary as it is the Fed's preferred inflation gauge. In terms of labor market data, the JOLTS report is scheduled for Tuesday, followed by the ADP Private Employment report on Wednesday. On Thursday, the weekly Jobless Claims data will be released, and the week's highlight will be the Nonfarm Payrolls report on Friday. These reports have the potential to generate volatility in the markets as they provide insights into the health of the labor market and overall economic conditions.
EUR/USD has experienced its sixth consecutive weekly decline and is consolidating below the 20-week Simple Moving Average (SMA), finding support at the 100-SMA. The overall bias remains tilted towards the downside; however, some indicators show oversold conditions. Starting Wednesday, Eurozone countries will release their preliminary August Consumer Price Index (CPI) figures. Additionally, the European Central Bank (ECB) will release its meeting minutes on Thursday.
After trading sideways for weeks, GBP/USD broke to the downside and dropped below 1.2600. The bias is tilted towards the downside, as the pair closed below the 20-day Simple Moving Average (SMA) for the first time since February. The British Pound lost momentum following weaker-than-expected UK data. EUR/GBP rebounded from monthly lows and finished the week in positive territory near 0.8600.
USD/JPY reached a new high at 146.63 but experienced a subsequent pullback. The 146.30 region remains a significant resistance area. The divergence in monetary policies between the Federal Reserve and the Bank of Japan continues to support the US Dollar. However, the potential for intervention by the Bank of Japan may limit further upside.
USD/CAD recorded another weekly gain but failed to consolidate above 1.3600, indicating potential signs of consolidation or a correction shortly. Canada releases GDP data on Friday.
Antipodean currencies continue to face downward pressure amid cautious market sentiment. The upcoming Chinese Purchasing Managers' Index (PMI) data, to be released on Thursday, will be closely monitored for further insights into the economic health of China, which can impact these currencies.
NZD/USD struggled to stage a significant recovery and ended the week flat, near monthly lows but above 0.5900. Similarly, AUD/USD finished the week around 0.6420 without any apparent signs of consolidation. The overall trend for both pairs remains downward.
In terms of events next week, Michele Bullock, the deputy governor of the Reserve Bank of Australia (RBA), will deliver a speech on Tuesday. It's worth noting that she will become the RBA governor on September 18. Additionally, Australia will release its Monthly Consumer Price Index (CPI) on Wednesday.
Like this article? Help us with some feedback by answering this survey:
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
Editors’ Picks
EUR/USD trades with a bearish bias above 1.0750 ahead of US economic data
EUR/USD trades on a softer note around 1.0770 during the Asian trading hours on Monday. Investors turn to cautious mode and prefer to wait on the sidelines ahead of the US key economic data this week.
GBP/USD hovers above 1.2500, focus on UK labor data scheduled for Tuesday
GBP/USD edges higher to near 1.2520 during the Asian session on Monday, possibly due to improved risk appetite. The Pound Sterling was bolstered by releasing higher-than-expected UK Gross Domestic Product figures on Friday.
Gold price loses its recovery momentum, eyes on Fedspeak
Gold price loses its recovery momentum on Monday during the Asian session. The hawkish remarks from the Federal Reserve and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower.
Here’s what needs to happen for The Graph price to revisit $0.422
The Graph price consolidation below a key hurdle shows that it is ready for a volatile move. With GRT retesting the upper limit of its rangebound movement, chances of an upside breakout are high.
Inflation and tariffs take center stage in discussions
This week market focus will center around inflation data from the US, the world's largest economy, poised to influence global market sentiment. Overall market sentiment appears optimistic as the potential for a US interest rate cut in September has re-entered the conversation.