The data was published in favor of the dollar last week. On Monday, the data on consumer confidence and houses for sale were much better than expected, which strengthened the dollar.
Federal Reserve Chairman Jerome Powell stuck to his hawkish tone during a speech on Wednesday, sending the dollar higher and gold lower. "We believe more constraints are coming, driven by the labor market," Powell said. He added that most policymakers predicted two more interest rate hikes in the dot plot. Meanwhile, the Federal Reserve's banking stress test results showed that the US banks were "well positioned to avoid a severe recession and continue to lend to households and businesses even during a severe recession."
The US Bureau of Economic Analysis (BEA) said it raised annual gross domestic product (GDP) growth to 2% from a previous estimate of 1.3% for the first quarter. In addition, claims for unemployment benefits fell by 26,000 to 239,000 in the week ending June 24.
The BEA reported on Friday that the personal consumption expenditures (PCE) price index fell from 4.3% to 3.8% on year in May. The Fed's preferred measure of inflation, the core PCE price index, fell to 4.6% from 4.7% over the same period. These publications made it hard to maintain the dollar's value.
Next week, the Australian central bank will announce its interest rate decisions, and various US employment data will be released. PMI data will also release for Europe, the UK, and the US.
On Monday at 14:00, the ISM Manufacturing PMI will be published (Prev: 46.9 | Fore: 47.2). If this index returns to the 48-50 range, the US dollar can strengthen against other currencies. Due to the dollar's weakness, this index should be published less than the previous data. Also, the PMI employment report will be significant if an unexpected drop below 50 in this index can limit the dollar's profit because US employment data will publish this week.
Note that banks in this country are closed on Monday and Tuesday due to American Independence Day, as a result, there will be changes in the trading schedule, which users will be notified through social media.
On Wednesday at 18:00, the FOMC June Meeting Minutes will release. At this point, if this publication shows that some policymakers have not ruled out a return to interest rate hikes in early July, it would not be surprising since the recent meeting and speeches of the chairman and members of the Federal Reserve have emphasized interest rate hikes. And this is not a new thing for the market. An upbeat tone on the inflation outlook could hurt the dollar, but investors will likely be hesitant to take large positions ahead of key employment data later in the week.
On Thursday at 12:15, the ADP Non-Farm Employment Change (Prev: 278k | Fore: 236k) will be published. As usual, every Thursday at 12:30, the US unemployment claims index (Prev: 239k | Fore: 247K) and at 14:00 JOLTS Job Openings (May) report (Prev: 10.10M | Fore: 9.94M) will release. The US employment data is very significant, the stronger the employment data, there is possibility that the NFP will be released stronger, so the dollar will strengthen. The employment data can help predict the NFP data. In general, if the data is better than the expectations or data with an upward surprise is published, the dollar will probably strengthen, and if it is the opposite, the dollar will weaken.
On Thursday at 17:30, the ISM Services PMI (Prev: 50.3 | Fore: 51.3) will be published. The service sector is much more significant for the US economy than the manufacturing sector because the US economy is service oriented. If this data is released as expected or higher, it can strengthen the dollar before the NFP data release.
Thursday's data is very significant. If the data is published well generally, the market will expect good data for Friday, and this issue can strengthen the dollar before the NFP data release.
As every month's first Friday, US employment data is published. At 12:30, Non-Farm Employment Change - NFP (Prev: 239k | Fore: 222k) and the Unemployment Rate (Prev: 3.7% | Fore: 3.6%) and the Average Hourly Earnings m/m (Prev: 0.3% | Fore: 0.3%) will publish. At the moment of the news release, the focus is mostly on the NFP data, and the symbols related to the dollar will perform good fluctuations. But in general, analysts will examine the outcome of these three data together.
Federal Reserve policymakers recently realized that there is some slack in the labor market. However, Powell noted in his speech that there are still about 1.7 job openings for every unemployed person in the US, indicating an imbalance between labor supply and demand. CME Group's FedWatch tool showed that markets raised the possibility of another 0.25% rate hike in July. Hence, investors will be looking to see if the jobs data is good enough to allow for another rate hike later in the year. Currently, there is about a 40% chance that the Fed will raise interest rates by a total of 0.5% before the end of the year. The market outlook suggests that the dollar can climb more if NFP rises more than expected. Stronger-than-expected employment growth could help the Fed convince investors of its willingness to raise interest rates to a range of 5.5%-5.75% from the current 5%-5.25%. On the other hand, a disappointing employment report, with an NFP release nearing 100,000, could revive expectations for less Fed contraction and weaken the dollar.
Attention, at the moment of the news release, abnormal fluctuations may be seen in the symbols related to the dollar. We recommend following capital management in trading.
On Monday, the Manufacturing PMI index of different countries will release. You can read the following article to learn about PMI and how to use this index in trading.
On Monday, China PMI at 01:45, Swiss PMI at 07:30, German PMI at 07:55, European PMI at 08:00, United Kingdom PMI at 08:30, United States PMI at 13:45, and on Friday at 14:00 Canadian PMI will be released. You can see this data's previous and forecast value in the Trendo application > economic calendar section.
Consumer price index or Swiss inflation (Prev: 0.3% | Fore: 0.3%) will publish on Monday at 06:30 UTC.
Interest rate setting meeting (July) (Prev: 4.10% | Fore: 4.35%) and Bank of England monetary policy statement on Tuesday at 04:30: Australia's central bank will meet on Tuesday to decide its monetary policy in July. And following the decrease in the monthly consumer price index, policymakers are less inclined to increase the interest rate in the third consecutive meeting. The Reserve Bank of Australia refrained from raising interest rates in April, but the contractionary cycle resumed in May and June. A fall in the 12-month CPI to 5.6% in June, combined with soft PMI figures for the same month and lingering doubts about China's economy, suggest that the contractionary cycle will end this month. However, we cannot entirely rule out a third straight increase as the labor market continues to contract. Employment in May increased significantly by 76,000. Even if the Reserve Bank of Australia refrains from hiking in July, it will likely maintain its hawkish stance. Therefore, the core effect of the meeting outcome may be neutral for the Australian dollar in the worst-case scenario, with market risk sentiment likely to be a bigger driver for the currency.
Changes in employment (June) (Prev: -17.3K | Fore: 22k) and unemployment rate (June) (Prev: 5.2% | Fore: 5.2%) 12:30: Another central bank that is considering whether The Bank of Canada's next move should be to freeze or raise interest rates. This week's employment report could be crucial in helping policymakers make decisions before July 12. Canadian employment unexpectedly fell in May, so another weak report in June could almost certainly stop the Bank of Canada's contractionary cycle in July, especially since there was a downside surprise in inflation. This leaves the Canadian dollar at significant risk of eroding its one-month rally against the US dollar.