Strong US Employment Data Allowed the USD to Win Back Some of the Losses (Weekly Review)

The most important events of the past week include the meeting of the Reserve Bank of Australia and the release of the US labor market data and wages, which could shed light on the prospects for the US Fed to lower the interest rate, expectations of which negatively affected the dynamics of the USD. Also, the attention of participants in financial markets was focused on the release of macroeconomic statistics for Germany and the Eurozone, but its impact was generally relatively insignificant.

The RBA once again lowered the interest rate, but despite this, the AUD showed positive dynamics, which was facilitated by the results of the meeting of the leaders of the United States and China, which showed their desire to continue negotiations on trade issues. Although analysts are still skeptical about the imminent termination of the trade war between countries, the Aussie paired with the USD was able to reach a level of 0.7048, from which it was dropped to 0.6958.

Profit taking on short positions in the US dollar was triggered by fairly strong Nonfarm Payrolls, which exceeded the forecast and past values. As a result, some USD competitors closed the week with a decline that worsened their prospects. Nevertheless, expectations for the Fed to lower rates remain quite high, so the bulls on the USD should still be extremely cautious, although in the short term, it can continue to grow.

Schedule for this week

Monday, July 8
06:00 GMT - Germany. Industrial Production;
19:00 GMT - USA. Consumer Credit.

Tuesday, July 9
05:45 GMT - Switzerland. Unemployment Rate;
12:45 GMT - USA. Fed Chair Powell Speaks;
12:55 GMT - USA. Redbook Index.

Wednesday, July 10
21:00 GMT – New Zealand. RBNZ Governor Orr Speaks;
00:30 GMT - Australia. Westpac Consumer Confidence;
01:10 GMT - Australia. RBA’s Debelle Speaks;
01:30 GMT - PRC. Consumer Price Index (CPI);
08:30 GMT – United Kingdom. GDP;
08:30 GMT – United Kingdom. Industrial Production;
08:30 GMT - United Kingdom. Manufacturing Production;
08:30 GMT - United Kingdom. Trade Balance;
14:00 GMT - USA. Fed Chair Powell Testifies;
14:00 GMT - Canada. BOC Interest Rate Decision;
14:00 GMT - Canada. Bank of Canada Rate Statement;
14:00 GMT - Canada. Bank of Canada Monetary Policy Report;
14:15 GMT - Canada. BOC Press Conference;
18:00 GMT - USA. FOMC Meeting Minutes.

Thursday, July 11
22:45 GMT - New Zealand. Electronic Card Retail Sales;
00:00 GMT - Australia. Prices paid Index;
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:30 GMT – USA. Initial Jobless Claims;
12:30 GMT - USA. Consumer Price Index (CPI).

Friday, July 12
22:30 GMT – New Zealand. Business NZ Purchasing Managers Index (PMI);
02:00 GMT - PRC. Trade Balance;
02:00 GMT – PRC. Import/Export;
04:30 GMT - Japan. Industrial Production;
09:00 GMT - Eurozone. Industrial Production;
12:30 GMT - USA. Producer Price Index (PPI).

Author: Anthony Porter, IAFT Analyst