USD Slowed Down Dropping (Weekly Review)

The past week showed no increased activity among participants in the foreign exchange market compared to the week before past. Expectations for the Fed to decrease the interest rate in the foreseeable future continued to negatively affect the USD dynamics, but its decline, which started last week, was suspended due to the news that the US President Donald Trump intended to meet with Chinese leader Xi Jinping at the G20 summit to talk over trade disputes.

In anticipation of the above, speculators fixed profits on short USD positions paired with the euro, the British pound, the Japanese yen and the Swiss franc. Political risks associated with the re-election of the British Prime Minister and Brexit traditionally contributed to pressure on the GBP, which paired with the USD ended the week within the 27th figure, and opened the next week with a decline to 1.2660. There are still no reasons for any large-scale growth of the GBP/USD, but amid alleged overall USD weakness, the pair may return to the highs of the week.

Technical factors suggested a fairly large-scale growth of the euro against the dollar, but the bulls did not find the strength to move above 1.1393. The decision of the leaders of the two countries to take a breather in the trade war had a positive effect on dynamics of the USD, which, starting this week, demonstrates a positive trend. The topic of the Fed lowering the interest rate has so far faded into the background, and the suspension of the war does not mean its end, so the decrease in the rate can be recalled at any time, and the USD may again be under pressure.

Schedule for this week:

Monday, July 1
09:00 GMT - Eurozone. Unemployment Rate;
10:15 GMT - Eurozone. ECB’s Philip Lane Speaks;
13:45 GMT - USA. Markit Manufacturing PMI;
14:00 GMT - USA. ISM Manufacturing PMI.

Tuesday, July 2
22:00 GMT – New Zealand. NZIER Business Confidence (QoQ) (Q2);
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Interest Rate Decision;
04:30 GMT – Australia. Reserve Bank of Australia (RBA) Rate Statement;
06:00 GMT - Germany. Retail Sales;
09:30 GMT - Australia. RBA Governor Lowe Speaks;
13:30 GMT - Canada. Manufacturing PMI;
14:00 GMT - New Zealand. GlobalDairyTrade Price Index.

Wednesday, July 3
01:30 GMT - Australia. Trade Balance;
01:30 GMT - Australia. Import/Export;
01:30 GMT - Australia. Building Approvals;
12:15 GMT - USA. ADP Nonfarm Employment Change;
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Trade Balance;
13:45 GMT - USA. Markit Composite PMI;
14:00 GMT - USA. Industrial Orders;
14:00 GMT - USA. ISM Services PMI.

Thursday, July 4 
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
01:30 GMT - Australia. Retail Sales;
09:00 GMT - Eurozone. Retail Sales;
09:10 GMT - Eurozone. ECB's De Guindos Speaks.

Friday, July 5
22:30 GMT - Australia. AIG Construction Index;
06:00 GMT - Germany. Factory Orders;
12:30 GMT - USA. Nonfarm Payrolls;
12:30 GMT - USA. Unemployment Rate;
12:30 GMT - USA. Average Hourly Earnings;
12:30 GMT - Canada. Employment Change;
12:30 GMT - Canada. Unemployment Rate.

Author: Anthony Porter, IAFT Analyst