It will be another hectic week in the forex market, with a couple of central bank catalysts and the highly anticipated US NFP release.
Will the RBA keep interest rates unchanged this time around? Will the FOMC meeting minutes have any surprises?
Before all of that, I wrote ICYMI A quick recap of market topics That pushed the currency pairs last week. check it!
Now for the closely watched economic indicators on the calendar this week:
Reserve Bank of Australia monetary policy decision
Tuesday (July 4, 4:30 a.m. BST)the Australian central bank will announce its interest rate decision, which is likely to keep borrowing costs unchanged at 4.10%.
As you can see, inflation turned out to be much weaker than expected in May, so policy makers have ample reason to sit on their hands for now.
Then again, jobs data beat expectations, with wage growth continuing to put upward pressure on overall price levels. Another 0.25% rally this month could lead to some daily gains for the Australian dollar, but traders are still likely to keep future policy expectations in mind.
Minutes of the Federal Open Market Committee meeting
by the middle of the week (July 5, 6:00 PM GMT)The spotlight is bound to turn to the June FOMC meeting minutes, as market watchers are keen to see if more rate hikes are in the cards.
Remember, the Fed kept interest rates on hold at 5.25% last month, its first pause after a series of 10 consecutive increases. However, Fed Chair Powell reiterated that the upcoming meetings are “live”, suggesting that they are keeping the door open for more hawkish moves.
The transcript of their latest meeting should provide more clues about how other committee members lean, as well as their stance on employment and inflation.
Canadian jobs report
Friday (July 7, 12:30 PM GMT), Canada will print a jobs report for June and it is likely to show a 22k recovery in employment after the previous slump of 17.3k. This should be enough to keep the unemployment rate steady at 5.2% for the month.
A larger-than-expected increase in employment could revive the Bank of Canada’s tightening hopes, even after it disappointed the latest set of CPI numbers. After all, like most major economies these days, Canada may also be struggling with flat inflation coming from upward wage pressures.
US Nonfarm Payrolls
Last but not least, the June Nonfarm Payrolls report is due July 7, 12:30 PM GMTwhich is set to show a smaller 222k increase in jobs than the previous gain of 339k.
However, it should be noted that the US job market has been consistently surprised to the upside in the past 14 months, so there is a very good chance that we will see another strong number.
If so, expectations of a Fed rate hike could rebound again, potentially leading to gains for the dollar. Traders are likely to pay close attention to Average Hourly Earnings, which is expected to show another rise of 0.3%, as this will affect inflation estimates.
Major indicators of course are due throughout the week, including ISM Manufacturing PMI (July 3, 2:00pm GMT), ISM Services PMI (July 6, 2:00pm GMT), ADP Nonfarm Employment Change (6 July, July 12 (15pm GMT) and JOLTS Job Openings (July 6th, 2:00pm GMT) are likely to influence the NFP outlook and USD price action.