The US dollar is going to end this week on a bullish note, boosted by previously released US data, which showed that producer prices posted their most significant annual surge in more than a decade, in the 12 months through July.
The US dollar managed to keep itself strong on the day, staying near its highest level in four months against a basket of other currencies, as investors sought further hints from the Federal Reserve on its plans to reduce monetary stimulus. Apart from this, the investors turned toward safe-hafen assets, as rising numbers of COVID-19 infections raised doubts over recovery from the pandemic. In the meantime, the increasing hopes about a quicker-than-expected US interest rate hike also played a significant role in supporting the greenback.
Moving ahead into the next week, the range of Retail Sales and Monetary Policy Statements, along with Unemployment Claims and Crude Oil Inventories, will control the direction of the market. Besides this, the chatter surrounding increasing COVID-19 infections and geopolitical tension headlines will also be crucial to watch.
Top Economic Events to Watch This Week
1 – Minutes of the Monetary Policy Meeting – Tuesday – 2:30 GMT
The minutes of the Reserve Bank of Australia meetings are usually released two weeks after the interest rate decision. The minutes offer a complete record of the discussions held between the RBA’s board members on economic conditions and monetary policy, which influence their decision to adjust interest rates and bond buys.
They also record the votes of the individual members of the Committee. In addition to this, the thoughts of the members regarding international economic developments and the exchange rate value are also shared in the minutes. In simple words, if the RBA delivers a hawkish view of the inflationary outlook for the economy, then the markets see a higher probability of a rate hike, which is understood as bullish for the Aussie currency.
Conversely, if the RBA is dovish about the inflationary outlook for the economy, then the markets see a higher probability of a rate cut, which is seen as bearish for the Aussie currency.
2 – US Retail Sales (MoM) – Tuesday – 13:30 GMT
The US Census Bureau publishes this data. It is a survey of goods sold by retailers, based on a sampling of retail stores of different types and sizes.
It is considered a key indicator to measure the pace at which the US economy is growing or declining. The data shows the performance of the retail sector over the short and mid-term. In the stated case, the positive economic growth has a bullish effect on the US currency, while a downward figure is seen as negative (or bearish) for the USD.
ACTUAL: 0.6 %
CONS: -0.4 %
DATE: Fri Jul 16, 2021 17:30
3 – RBNZ Interest Rate Decision – Wednesday – 3:00 GMT:
The Reserve Bank of New Zealand declares this interest rate decision. Suppose the Reserve Bank of New Zealand is hawkish about the inflationary outlook of the Economy and raises the interest rates. This would be seen as bullish for the NZD, while, if the Reserve Bank of New Zealand delivers a dovish view about the inflationary outlook of the Economy and cuts the interest rates, it is seen as bearish for the NZD.
4 – Crude Oil Inventories – Wednesday – 15:30 GMT
The EIA Crude Oil stockpiles report released by the Energy Information Administration is a weekly measure of the change in the number of barrels of crude oil and its derivatives in stock.
It is a key US indicator and mainly affects the Canadian dollar, due to Canada’s sizable energy sector. This report tends to affect the oil price itself and consequently, it has more influence on WTI crude futures. This report is the main gauge of irregularities in supply and demand in the market, pointing to variations in production levels and price volatility. If ‘Actual’ is lower than ‘Forecast’, it is regarded as bullish for the USD currency.
DATE: Wed Aug 11, 2021 19:30
5 – Minutes of the FOMC Meeting – Wednesday – 19:00 GMT
The minutes of the FOMC Meeting are typically issued three weeks after the day of the policy decision. Investors generally watch this event for fresh clues regarding the policy outlook in this publication, alongside the vote split. A bullish tone is expected to boost the USD.
At the same time, a dovish view is seen as bearish for the USD. It should be noted that the market reaction to the FOMC Minutes could be delayed, because, unlike with the FOMC’s Policy Statement, news outlets don’t have access to the publication before the release.
6 – AUD – Employment Rate – Thursday – 02:30 GMT
AUD – Employment Change – This data is generally released by the Australian Bureau of Statistics. It measures the change in employment levels in Australia. In simple words, an improvement in this indicator positively affects consumer spending, which boosts economic growth. High employment figures are deemed bullish for the AUD. Conversely, low figures are regarded as negative (or bearish) for the Aussie currency.
CONS: 30 K
DATE: Thu Jul 15, 2021 06:30
ii) – Unemployment Rate – This data is typically released by the Australian Bureau of Statistics. It measures the number of unemployed workers, divided by the total civilian labor force. It is one of the critical indicators for the Australian Economy, as the number of unemployed people is an essential sign of overall economic health, due to the correlation between unemployment levels and labor-market conditions.
If the rate goes up, it shows a lack of expansion within the Australian labor market. As a result, a rise in the unemployment rate leads to weakness in the Australian Economy, and low figures are seen as bullish for the AUD. So, a rise is seen as negative or bearish for the AUD currency.
ACTUAL: 4.9 %
CONS: 5.5 %
DATE: Thu Jul 15, 2021 06:30
7 – United Kingdom Retail Sales (MoM) – Friday – 7:00GMT
National Statistics typically releases this data. It aims to measures the total receipts of retail stores. The monthly changes in percentages reflect the rate of changes in retail sales.
Changes in retail sales are broadly regarded as an indicator of consumer spending. Therefore, an upward reading is considered bullish for the UK currency, while a downward reading is seen as bearish.
ACTUAL: 0.5 %
CONS: 0.4 %
Fri Jul 23, 2021 11:00