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Last week was characterised by a rapid appreciation in the value of the US Dollar. However, this wasn’t due to improving economic conditions in the US as much as confirmation of deterioration in other countries. The dollar also took strength from falling commodity prices.

The currencies worst hit against the Greenback were the UK Pound, Euro, Canadian Dollar and Australian Dollar. The GBPUSD made a new 21-month low, the EURUSD has its sharpest fall in 3 years, the AUDUSD extended its longest loosing streak since 1980 and the CADUSD had its biggest weekly rally since 1971.

The UK, Eurozone and Australia all kept interest rates on hold last week. Australia sighted economic slowdown in a statement that left the way open for a rate cut at the RBA’s next meeting while the Eurozone conceded that there was no monetary policy bias, thus killing any hopes of further rate hikes from the ECB.

The Canadian Dollar suffered from a poor labor report. Employment Change came in at -55K as opposed to the +5K expected.

The coming week is very busy with a host of high volatility events expected once again. We begin on Monday morning with the RBA Monetary Policy Statement. Traders will be looking at this to confirm the chance of a rate cut at the next interest rate meeting. We also have UK PPI Input at 09:30 with expectations of 1.0% MoM growth for July. Heading into the US trading session we have Canadian Housing Starts at 13:15. Last week we saw Canadian Building Permits fall by more than expected at -5.3% MoM with Housing Starts also expected to fall slightly from 218K in June to 210K for July.

Tuesday will bring the latest round of inflation data from the UK with the Consumer Price Index (CPI) YoY watched very closely. Economists are expecting the YoY figure to rise to 4.1%. Later on Tuesday we will see high volatility for the US and Canadian Trade Balance releases. US Trade Deficit is expected to widen from 59.8B to 61.8B while Canadian Trade Surplus should increase slightly to 5.7B from 5.5B.

We continue on Wednesday with the Japanese preliminary GDP. This is a quarterly calculation with GDP expected to show contraction of 0.6% from growth of 1.0% in the previous quarter. UK Claimant Count Change is also due with an extra 17.5K expected to have claimed unemployment benefit in July. There is an economic report from the BOE due at 10:30. The BOE Inflation Report follows yesterday’s CPI news. The next round of high volatility data from the US comes at 13:30 with Core Retail Sales and Retail Sales hitting the wire. The Core number is expected to show 0.5% growth MoM while the raw number will probably be flat at 0.0% MoM.

Thursday will be typically busy with high volatility from the Eurozone, US, Canada and New Zealand. First up is German Preliminary GDP QoQ. GDP is expected to have contracted by 0.8% after 1.5% growth in the previous quarter. Trichet spoke last week of a “technical correction” in GDP and this would be the first evidence of that. At 10:00 Eurozone CPI YoY is due with a number of 4.1% widely expected. Next is US Core CPI MoM. A reading of 0.2% is expected after 0.3% growth in June. The Bank of Canada will add to the excitement on Thursday with its Summer Quarterly Review. Traders will be particularly interested to see how the BOC explains Canada’s economic performance over recent months. Data from New Zealand will be of high importance with Core Retail Sales and Retail Sales due. Both numbers are expected to post a MoM decline with -0.8% and -1.6% anticipated respectively.

Friday will round off the week with two more high volatility events. First is the latest round of Treasury International Capital (TIC) Net Long-Term Transactions data. It is expected that 55.0B of foreign investment came into the US long-term securities market last month from 67.0B the month before. Also due is the preliminary University of Michigan Consumer Sentiment with a number of 62.0 expected.

Visual Analysis and Historical Data

In the up coming week the visual analysis and historical data tool will support the US Core CPI release.

Last week was extremely busy in terms of economic news. The first half of the week was dominated by the Euro and Aussie Dollar, which made new record highs and fresh 25-year highs against the USD respectively. However, the Greenback was rescued by an 11% weekly decline in the price of oil. This is the largest weekly fall in three years and may form a significant top. Although the Euro and Aussie have retreated from their highs the US Dollar negative trend continues.

This week will be quieter on the news front with US housing market data seen as the main focus. Last week saw an unexpected increase in Building Permits from 978K (revised) to 1091K and Housing Starts from 977K (revised) to 1066K. If traders believe that the trend will be carried forward into this week then they will be hedging their bets for better than expected Existing Home Sales and New Home Sales. Existing Home Sales are due on Thursday July 24th at 15:00 and are expected to fall from 4.99M to 4.93M. New Home Sales will be released on Friday July 25th at 15:00 and a decline from 512K to 508K is expected.

Apart from housing data it promises to be a very quiet week for the US in terms of high volatility events. The only other big news scheduled is Core Durable Goods Orders. Also due for release on Friday, the market is expecting -0.2% for June versus -0.9% in May.

Elsewhere the UK has the busiest week in store. The first high volatility event is due on Tuesday at 09:45 when BOE Governor King and Deputy Governor Gieve testify before the UK Treasury Committee. This will be followed on Wednesday July 23rd at 09:30 by the BOE MPC Meeting Minutes. The vote breakdown is expected to show an 8-1 split in favour of a hold at 5.00% with Blanchflower calling for a cut once again. On Thursday 24th at 09:30 UK Retail Sales for June will hit the wire. There was an unexpected gain of 3.5% in May and the consensus estimate is for this to be offset by a 2.5% decline in June. Before the week is up we will see UK GDP QoQ. The previous quarter's data has already been revised lower to 0.3% from 0.4% and the preliminary release for the most current data is expected to show 0.2%. It will be interesting to see if the BOE can fight inflation (CPI YoY stands at 3.8%) with interest rate hikes in the face of slowing economic growth.

Data from Canada also promises to be plentiful for the week ahead. On Tuesday at 13:30 we will see Core Retail Sales which are expected to show a 0.8% growth for June, down from the 1.1% seen in May. Wednesday will bring us Canadian Core CPI for the month of June. Analysts are expecting 0.2% growth, down slightly from the 0.3% seen in May.

Other high volatility events for the coming week are as follows:

Monday 21st:
02:30 - Australian PPI QoQ

Wednesday 23rd:
02:30 - Australian CPI QoQ
22:00 - RBNZ Interest Rate Statement

Thursday 24th:
09:00 - German Ifo Business Climate Index

Visual Analysis & Historical Data
This week the visual analysis and historical data tool will support the following data releases:

BOE MPC Meeting Minutes
Canadian Core CPI MoM
US Existing Home Sales
US New Home Sales