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This week could be the key to setting the near to medium term sentiment in the USD. Highly anticipated economic data is due this week with the Advance GDP and Non-Farm Employment Change top of the list.

The US economic calendar begins the week slowly and we have to wait until 15:00 on Tuesday 29th for our first high volatility event. The Consumer Confidence Index has been falling consistently with economists expecting further declines this month. Consumer Confidence is seen as key to consumer spending. However, with global energy inflation driving domestic CPI its effects are hard to decipher.

Further high volatility will come from the US on Wednesday with ADP Non-Farm Employment Change due. This data acts as a preview to the official Non-Farm Payrolls news released later in the week. However, any correlation between the two sets of numbers is weak at best. Never the less, traders will be watching keenly at 13:15 on the 30th.

Thursday will be a busy trading period all-around but the main focus will be US Advance GDP. This data related to Q2 and is expected to show annualized growth of 2.2%. It should also be noted that the Employment Cost Index QoQ and Initial Jobless Claims are due at 13:30. Although they are not expected to be high volatility events themselves they will carry increased influence due to the employment data due the following day.

The first Friday of every month is always a big day due to Non-Farm Employment Change. This news carries arguably the most volatility to the market of any economic data. Coupled with the release of US Unemployment Rate (which is creating more volatility of late as economists watch the labor market show signs of economic recession) the early morning New York session promises to be a busy one. Payrolls are expected to show contraction of 75K for the month of June while Unemployment Rate probably increased to 5.6%.

It should not be forgotten that the ISM Manufacturing Index is also due on Friday. Traders are expecting the Index to show 49.4, a level that indicates contraction in the manufacturing industry.

Further high volatility events for this week are as follows:

Sunday July 27th
New Zealand Trade Balance

Monday July 28th
New Zealand Building Consents

Wednesday July 30th
Australian Building Approvals

Thursday July 31st
Australian Retail Sales
Australian Trade Balance
Swiss CPI
Nationwide House Price Index
Canadian GDP

Friday August 1st
UK Manufacturing PMI

As a side note it may be worth watching AUDUSD this week. With decent volatility expected in both currencies and price just below 25-year highs it could be a pivotal week.

This week the market awaits commentary from Fed speakers, including Bernanke, regarding future monetary policy. Economists are interested to see whether the Fed sees inflation as more of a risk than a weak economy ahead of future interest rate meetings. The question remains: can the US economy survive an inflation fighting rate hike without falling into recession.

This comes on the back of comments last week from the ECB. The Eurozone increased interest rates to 4.25% last Thursday but stated that they don’t expect any future need for further hikes. This resulted in ‘buy on rumour sell on fact’ trading in the EURUSD. Post data the currency pair fell from 1.5908 to a Thursday low of 1.5681.

Early focus in the new week will be on the reaction from US traders following the dismal US Labor market data. Non-Farm Employment Change was in negative territory once again (-62K), Unemployment Rate remained at 5.5% and Initial Jobless Claims climbed above 400K for the second time this year. US markets were closed on Friday for the Independence Day Holiday so it will be interesting to see how traders digest the news after the long weekend.

Monday, Tuesday and Wednesday this week will see a 3-day G8 meeting in Hokkaido, Japan. The meeting is expected to be dominated by climate change, food and commodity prices. There have been pre-meeting comments from Japan and the US blaming a weak US Dollar for inflated energy prices. Traders are waiting to see if G8 members’ comments are strong enough to support a dollar rally on speculation of central bank intervention.

In other news this week, high volatility economic data from the US takes a bit of a breather. The main events will be Fed Chairman Bernanke speech at 13:00 on Tuesday and his testimony before the House of Representatives Committee on Financial Services on Thursday at 15:00. Traders will be looking for hints as to the Fed’s concern over inflation.

The US is also due Pending Home Sales at 15:00 on Tuesday, Initial Jobless Claims at 13:30 on Thursday (more volatility than usual is expected due to the +400K reading last week) and the Trade Balance and Preliminary Michigan Sentiment at 13:30 and 14:55 respectively. The only data that is expected to show any improvement is Initial Jobless Claims where a slight moderation to 397K is expected.

Elsewhere the Canadian economy steels the spotlight with no fewer than five high volatility releases due. Monday will see Building Permits (13:30) and the BOC Business Outlook Survey (15:00). Following this we will see Employment Change and Unemployment Rate at 12:00 and the Canadian Trade Balance at 13:30 on Friday.

Additional high volatility events this week are as follows (all times are UK DST):

Monday
UK Industrial Production (09:30)
NZIER Business Confidence (23:00)

Tuesday
Halifax House Price Index (NTS)

Wednesday
Australian Home Loans (02:30)

Thursday
Australian Employment Change (02:30)
Australian Unemployment Rate (02:30)
BOE Interest Rate Statement (12:00)

The ECB Interest Rate Announcement and US Non-Farm Employment Change look set to dominate this week's economic calendar with much volatility expected.

Last week we saw Dollar negative sentiment drag the greenback lower against the majors. This was after the FOMC seemed to distance itself from the need for an urgent rate hike. It seems that the negative pressure on the economy outweighs the need for commodity inflation controlling rate increases. Interest rate futures reacted accordingly with only a 25% chance of a rate hike in August (down from 40%).

Therefore, it stands to reason that this weeks NFP report will be very closely watched. We have been seeing US labor conditions deteriorate recently with a contraction in payrolls, a steadily rising trend in the number of Initial Jobless Claims and a rapid increase to 5.5% Unemployment Rate.  If the US labor market fails to show signs of improvement this week, and few economists are expecting that it will, then further US Dollar weakness is likely. The Non-Farm Employment Change, Unemployment Rate and Average Hourly Earnings data releases have all been moved to Thursday July 3rd because of the US Independence Day holiday on Friday July 4th.

Also due on Thursday is the ECB Interest Rate Announcement. Rates are expected to increase from 4.00% to 4.25% as the ECB looks to counteract increasing inflation. With the CPI Flash Estimate expected to increase to 3.9% YoY (release on Monday June 30th at 11:00 CET) the hike is almost a done deal. As usual traders will be watching the ECB commentary at the press conference held later in the day. It is due to take place at the same time as the US labor releases so extreme volatility is expected.

Elsewhere we have a busy week in store for the CAD, NZD, GBP and AUD.

Trading in the Canadian Dollar will be influenced by oil prices and also Gross Domestic Product (GDP) and the Ivey PMI. The latter may see slightly less volatility than normal as it falls on the US holiday. The week will be cut slightly short in Canada too because of the Canada Day holiday on Tuesday July 1st.

High volatility will be seen in the New Zealand Dollar at the beginning of the week with Building Consents and Business Confidence both due to hit the wire. Trading in the NZDUSD is likely to be dominated by US data arriving later in the week however.

The GBP benefited last week from BOE comments about inflation. This week we will see Nationwide House Prices, Manufacturing PMI, the Halifax House Price Index and Services PMI from the UK. Each of these releases is expected to create high market volatility.

Volatility in the Australian Dollar will benefit this week from the releases of the RBA Interest Rate Statement (expected to remain on hold at 7.25%), Building Approvals, Retail Sales and Trade Balance data.

This week's high volatility events are as follows (all events are London time, UK DST, GMT+1):

Sunday: New Zealand Building Consents (23:45)
Monday: New Zealand Business Confidence (04:00)
Canadian GDP (13:30)
Tuesday: Japanese Tankan Large Manufacturers Index (00:50)
RBA Interest Rate Statement (05:30)
Nationwide House Price Index (07:00)
UK Manufacturing PMI (09:30)
US ISM Manufacturing Prices (15:00)
Wednesday: Australian Building Approvals (02:30)
Australian Retail Sales (02:30)
US ADP Non-Farm Employment Change (13:15)
Thursday: Australian Trade Balance (02:30)
Swiss CPI (06:45)
Halifax House Price Index (NTS)
UK Services PMI (09:30)
ECB Interest Rate Announcement (12:45)
ECB Press Conference (13:30)
US Non-Farm Employment Change (13:30)
US Unemployment Rate (13:30)
US ISM Non-Manufacturing Composite (15:00)
Friday: Ivey PMI (15:00)

The US Dollar ended last week broadly lower against the majors on worse than expected economic data and reduced speculation of a Fed Interest rate hike. In fact the greenback traded lower against the Japanese Yen, Swiss Franc, Euro, GB Pound, Canadian Dollar and the Australian Dollar, as it was unable to hold on to all of the prior week’s strength.

On the data front the USD was not helped by Housing Starts falling to a 17 year low or the fact that the Empire State Business Conditions Index, Building Permits, Philly Fed Index, Industrial Production, Capacity Utilization, Current Account and Initial Jobless Claims all pointed towards economic slowdown.

Interest rate futures are now showing just an 8% chance that the FOMC will increase rates this month. As you would expect the FOMC Interest Rate Statement on Wednesday is the major focus for the week. Particular attention will be paid to the Fed’s views on inflation risk and economic slowdown. Remember that the Fed’s traditional tool for dealing with inflation is a rate hike. However, increased interest rates may put too much pressure on an already weakening economy.

The Federal Reserve Open Market Committee is expected to leave the Federal Funds Rate unchanged at 2.00% this week.

Aside from the interest rate announcement we have high volatility housing data from the US this week. On Wednesday, New Home Sales are expected to contract once more to 515K. This will be followed by Existing Home Sales data on Thursday that is expected to post an increase to 4.96M annualized.

The coming week promises to be fairly quiet from an economic news standpoint with the following high volatility events scheduled:

Monday June 23^rd - German Ifo Business Climate Index
Wednesday June 25^th - ECB President Trichet Speaks, US Core Durable Goods Orders, New Zealand Current Account
Thursday June 26^th - BOE MPC Treasury Committee Hearings, New Zealand GDP & Trade Balance

Visual Analysis & Historical Data

Once again our VA tool will be available for following major news releases. The US housing duo of New Home Sales and Existing Home Sales will both be featured.

The main topic of conversation this week will be if the USD can maintain its recent firm stance against the EUR, CAD, CHF and JPY amongst others.

The main contributing factor to the Dollar’s strength was increased speculation that the Fed will raise interest rates at the August FOMC Meeting. According to interest rate futures there is now a 60% chance of at least a 0.25% hike.

The Dollar closed higher on the week against the world’s majors in the face of better than expected retail sales and consumer inflation numbers. However, the data continues to be mixed with Initial Jobless Claims and the University of Michigan Consumer Sentiment both coming in worse than expected.

The US economic schedule for the coming week is a busy one. We begin on Monday with three high volatility events: Empire State Business Conditions Index, TIC Net Long-Term Transactions and Fed Chairman Bernanke’s speech at the Senate Finance Committee Health Reform Summit.

On Tuesday we will see the release of Housing Starts and the Producer Price Index. Both of these events promise to come with a high level of interest attached to them. At the same time we will also see the slightly less important Core PPI, Building Permits and US Current Account data.

Wednesday and Friday promise to be slightly quieter from the point of view of US economic releases. However, high volatility is likely when Fed Governor Kohn testifies before the Senate Subcommittee on Securities, Insurance and Investment. As usual we will also see Initial Jobless Claims. Traders will be keenly watching this data after last week’s 384K, with figures expected to fall slightly to 375K this week.

It is not just the US economic calendar that can set the tone for the trading week. We are due several high volatility events from other sources too.

On Monday we will see the highly anticipated release of the Eurozone Core CPI YoY. This is the benchmark figure that the ECB uses to set interest rates. There is speculation that the ECB will raise rates in the near future in the face of higher inflation. Core CPI is expected to climb to 1.8% and any surprises to the downside could open the door for further EUR shorting.

Further high volatility events this week are as follows:

Tuesday:
RBA Meeting Minutes - 02:30
UK CPI YoY - 09:30
German ZEW Economic Sentiment - 10:00

Wednesday:
BOE MPC Meeting Minutes - 09:30
BOE Governor King Speaks - 19:30

Thursday:
SNB Libor Interest Rate Announcement - 08:30
SNB Monetary Policy Assessment - 09:00
UK Retail Sales - 09:30
Canadian Core CPI - 12:00

Friday:
Canadian Core Retail Sales - 13:30

Visual Analysis

This week the visual analysis tool will be in use for the US PPI, BOE Meeting Minutes and the Canadian Core CPI.

Check out the full economic calendar and economic speeches.

Our Economic Calendar has been updated for the upcoming working week. It is important to mention that our default time setting has changed to GMT+1 to reflect UK DST (daylight saving time)/ British summer time. If you would like to know how this relates to your domestic time you can use the Qlock World Time Clock.

This weeks’ main focus will undoubtedly be on employment data from the US. ADP Non-Farm Employment Change (Wednesday), Initial Jobless Claims (Thursday), Non-Farm Payrolls and Unemployment Rate (Friday) will all be closely watched. The fear is that the US economy is slipping into recession and the employment market is one of the most important driving factors of the economy.

Before the headline Payrolls figure hits the wire on Friday there will be considerable interest paid to US Manufacturing Data. The Institute of Supply Management is due to release its Manufacturing Index on Tuesday and the newer Non-Manufacturing Composite on Thursday. Traders’ focus will remain on weather either of these two indicators can pull their head above the 50 mark. A reading above 50 signifies expansion, while a reading sub 50 indicates industry contraction.

Elsewhere, New Zealand Building Consents (Sunday), Canadian GDP (Monday), Japanese Tankan Large Manufacturers’ Index, RBA Interest Rate Statement, UK Manufacturing PMI (Tuesday) and UK Services PMI (Thursday) round off a busy week all-round.

The Economic Speeches Calendar is equally as busy for the coming week. The focus will fall on Fed Chairman Bernanke’s Testimony to the Joint Economic Committee in Washington DC. It is expected that Bernanke will field some difficult question from the Committee on US Economic Outlook.

Traders will also keep a keen eye on RBA Governor Stevens’ Testimony to the House of Representatives Senate Standing Committee on Economics in Sydney.

If you wish to view this weeks' data at a later date you can visit its archive page.