Important data such as the NFP and ADP employment reports were released last week, and overall the data was in the dollar's favor. On Monday, the ISM manufacturing PMI index data was released weaker than expected and caused the dollar to weaken.
On Wednesday, the Federal Reserve's June policy meeting minutes showed that some policymakers supported a 0.25% interest rate hike. The minutes also restated that almost all members raised their forecast for a 2023 rate hike.
Based on ADP data released on Thursday, US non-farm employment increased by 497,000 in June. The release was much higher than the market expectations of 228,000 and helped boost the dollar mid-day. In addition, the ISM services PMI index improved from 50.3 in May to 53.9 in June, and the employment sub-index increased from 49.2 to 53.1. With this good data, the US dollar strengthened against other currencies.
On Friday, the US Bureau of Labor Statistics reported that the US non-farm payrolls (NFP) rose by 209,000 in June. This figure was lower than the market-expected figure of 225,000 and caused the dollar to come under selling pressure again. Details of the employment report showed that the unemployment rate fell from 3.7% to 3.6%, and annual wage inflation remained steady at 4.4%. Considering that the NFP data was less than market participants' expectations, the US dollar weakened in late market hours.
Next week, the central bank of New Zealand and Canada will announce their interest rate decisions, and various US inflation data will be released.
On Monday, the US Federal Reserve Free Market Committee's several members will give a speech. According to the results of the data and the Federal Reserve members' previous remarks, the policies of this institution for the next meeting to determine the Interest rate are clear and priced in the dollar's value. But market participants will continue to scrutinize the comments of the Federal Reserve officials. Ahead of the July 25-26 interest rate policy meeting, the Federal Reserve enters a shutdown period on July 15.
The US inflation data for June will publish and have a direct and decisive role in the decisions of the Federal Reserve in the July 26 interest rate meeting, which is why Wednesday will be an important day for the US dollar. At 12:30 UTC, Core CPI y/y (Prev: 5.3% | Fore: 5.0%) and Core CPI m/m (Prev: 0.4% | Fore: 0.3%) and CPI m/m (Prev: 0.1% | Fore: 0.3%) and CPI y/y (Prev: 4% | Fore: 3.1%) will be published. In general, the forecasts for the annual report indicate a sharp decrease in inflation, when the monthly core inflation rate is lower than expected, i.e., 0.3% or less, we can expect the possibility of the US dollar weakening in the news release's initial moments. On the other hand, a monthly core inflation release of 0.4% or higher is likely to have an adverse effect on the US dollar's performance.
Note that at the moment of the news release, you may see abnormal fluctuations in the symbols related to the dollar. We recommend following capital management in trading.
On Thursday at 12:30, the PPI m/m (Prev: -0.3% | Fore: 0.2%) will be published. This index is less important than inflation, but if it is released along with the inflation, it can cause a higher impact of inflation results on the dollar in the mid-term. In general, if it is higher than expected, we can expect the dollar to strengthen, and we can expect the weakness of the dollar if it is lower.
The US unemployment claims index (Prev: 248K | Fore: 249K) will be published as usual every Thursday.
The Prelim UoM Inflation Expectations (Prev: 61.5 | Fore: 61.8) and the Prelim UoM Consumer Sentiment (Prev: 64.4 | Fore: 64.8) will release on Friday at 14:00.
BOE Gov Bailey will give a speech on Monday at 15:00, and Wednesday at 08:00. The Wednesday speech is much more important because before that, on Tuesday at 06:00, we will witness the British employment report release for May. And the monthly GDP data release will be on Thursday at 06:00. You can see this data's previous and forecast value in the Trendo application from the economic calendar section.
Interest rate setting meeting (Prev: 5.50% | Fore: 5.50%) and the Bank of New Zealand's interest rate statement will be on Wednesday at 02 am: In its last meeting, the central bank clearly stated that it will review the received data for some time before making the next move. Economic data has been different since then, with GDP growth slowing slightly in the first quarter, but survey-based indicators point to an improvement in the second quarter. Generally, nothing is shocking enough to move the New Zealand central bank out of its neutral stance.
RBA Gov Lowe will give a speech on Wednesday at 03:10.
Interest rate setting meeting (Prev: 4.75% | Fore: 5%) and Bank of Canada minutes will release on Wednesday at 02 pm: Market participants have set almost equal odds for a 0.25% hike or no rate change. The argument for the BOC not to act is the continued decline in inflation this year, which is the most significant element for any central bank. In addition, Canada's manufacturing sector has declined sharply due to the global recession and oil prices. However, the labor market remains very tight, consumer prices have been resilient, and housing prices have not declined despite a sharp increase in interest rates because the population growth has been sturdy. However, it is expected that this bank will increase its interest rate by 0.25% to 5% because Canada's employment data recovered very well last week. Note that a press conference of the Central BOC will be held at 15:00 to explain more about the bank's policies. Generally, this meeting and speech can cause good fluctuations in the Canadian dollar.