Daily Brief, July 12 – Economic Events Outlook & Dollar Index Forecast
Arslan Butt • 2 min read
Happy Friday, fellas.
A day before, the dollar index fell to a five-day low after Federal Reserve Chair Jerome Powell retained the gate open for US interest rate cuts, though traders were wary of selling dollars aggressively until a policy review later this month.
In testimony to Congress, the Fed Chair Powell led to “broad” global instability that was clouding the US economic outlook amid skepticism about the trade conflict with China and other nations.
Besides that, the US inflation figures also failed to extend support to weakening US dollar. Although the consumer price index expanded 0.1% in June, the hike in the cost of living over the past 12 months slid to a four-month low of 1.6% from 1.8%.
On the fundamentals side, we need to look for economic events from China, Eurozone, and the US. Although these are low impact, these may help determine the market trends.
Economic Events Outlook
EUR – German WPI m/m – 6:00 GMT
Fellas, the data is released by Destatis and it’s a low impact in nature. It barely drives price action or movement in the FX market. However, any supposed huge deviation in figures can make a difference today. Economists are expecting it to drop to 0.2% vs. 0.3% in May 2019.
CNY – Trade Balance – Release Time Tentative
The Chinese trade balance isn’t listed with a time of release, however, it mostly comes out during the late Asian hours.
Considering the trade truce between the US & China, the investors may now look forward towards the June month’s trade balance data from China to determine the near-term trading bias not only for the Chinese Yuan but also for determining trends in Aussie pairs, gold, and stock markets. Analysts are expecting a drop in trade surplus from 279B to 276B, however, it’s not big enough to attain attentions.
USD – PPI m/m – 12:30 GMT
The producer price index is considered a leading indicator of consumer inflation. When producers charge extra for goods and services the higher costs are usually passed on to the consumer. So, the higher PPI can lead to higher CPI which pressures central banks to release hawkish monetary policies.
Today, the PPI figure is anticipated to have grown by 0.1% m/m in June, which is equal to the rate of May. Let’s look for deviations in actual figures.
USD – Core PPI m/m
It also shows a change in the price of finished goods and services sold by producers, excluding food and energy. The figure is due at 12:30 GMT and is expected to rise by 0.2% vs. 0.2% previously. Therefore, the dollar may continue trading based upon Fed rate cut expectations until we have fresh economic releases from the US.
Good luck, traders and stay tuned to FX Leaders for forex trading signals!