Last week we had another round of US data indicating at a rebounding economy. Nevertheless, we are left guessing regarding an interest rate hike in September. This week we’ll have a few more clues which will help us create a better idea of what to expect in September. Our focus this week will be on USD, CAD, AUD, & NZD.
Monday – Inflation, personal spending & income are some of the data we need to watch, however, as we have previously stated, manufacturing is one indicator we have to play close attention since it is one of the sectors closely watched by the FED, and further expansion would increase the chances of a rate hike in September. In June the index reached 53.5 (better than expected), and we are expecting another increase this month. Any better than expected results will be bullish for the USD.
Wednesday – ADP non-farm employment, US trade and balance, and the ISM non-manufacturing PMI numbers will set the stage for a USD rally, since together with Monday’s numbers, we will get another supporting argument for a rate hike in September.
Thursday & Friday – The initial jobless claims, plus the unemployment figures will confirm the strength of the US employment market. Any better than expected data will push the USD up.
Friday – The unemployment rate is expected to remain at 6.8% for the month of July, and together with weak GDP data in the recent months, and a BOC 0.25% rate cut, we expect the USDCAD to slide through the 1.31 resistance.
Tuesday – watch out for Australia’s interest rate decision, and the following statement. RBA’s previous statements supported a cheaper currency in fear that their relatively strong currency could slow growth. We are not expecting any rate change, but any dovish clues will send the AUD lower.
Thursday – Current unemployment rate in Australia stands at 6%, and the economy is expected to add 15K jobs. Any decrease in unemployment will support the AUD from further declines, but on the other hand, any increase will hammer it down.
Wednesday – New Zealand is another economy with weak performance, increasing unemployment, inflation below expectations, an interest rate cut of 0.25% last month, and what else can we say? Any surprise data will take us on a short ride up, but we are bearish on this currency for the week.