Forecasting the Coming Week: Powell’s testimonies and US inflation in the spotlight

Quite a negative week saw the Greenback close with losses in every single session, forcing the USD Index (DXY) to break below the key 105.00 support at the end of the week. Lower US yields, in combination with soft data, brought forward expectations of a rate cut by the Fed as soon as September. In addition, investors largely anticipated the landslide victory of the Labour Party at the UK elections, while cautiousness lingers ahead of the French second round of the snap elections on July 7.

The US Dollar (USD) came under strong selling pressure and ended the week around 105.00, the lowest level in the past three weeks. The New York Fed will publish its Consumer Inflation Expectations on July 8, while Chair J. Powell will hold his semi-annual testimony before Congress on July 9. Mortgage Applications tracked by MBA and Wholesale Inventories come on July 10 ahead of the Inflation Rate, and usual Initial Jobless Claims are due on July 11. Finally, Producer Prices and the flash Michigan Consumer Sentiment will be published on July 12.

EUR/USD extended its strong comeback and finally trespassed the key resistance at the 1.0800 region, boosted by the renewed offered bias in the Greenback. The Sentix Index, which tracks Investor Confidence in the euro area, kicked off the calendar on July 8 along with Balance of Trade results in Germany. On July 11, the final Inflation Rate in Germany will be revealed, while German Current Account figures will be unveiled on July 12.

GBP/USD saw its multi-day rally reclaim the area beyond the 1.2800 barrier towards the end of the week, always amidst Dollar’s weakness and investors’ assessments of the avalanche win by the Labour Party at the July 4 elections. The BRC Retail Sales Monitor is due on July 9, while GDP figures, Construction Output, Goods Trade Balance, Industrial and Manufacturing Production, and the NIESR Monthly GDP Tracker are all expected on July 11.

USD/JPY advanced further and clinched new 38-year highs within the boundaries of the 162.00 hurdle, closing its fourth straight week of gains. Average Cash Earnings and Bank Lending come on July 8, while Producer Prices are due on July 10, along with the Eco Watchers Survey. On July 11, weekly Foreign Bond Investment will be released along with Machinery Orders. On July 12, final Industrial Production will close the weekly calendar.

The broad-based improved sentiment in the risk complex lent legs to AUD/USD and encouraged it to surpass the key 0.6700 level with certain conviction as the week drew to a close. Home Loans and Investment Lending for Homes are expected on July 8, seconded by the Westpac Consumer Confidence Index on July 9. On July 12, the Melbourne Institute will publish its Consumer Inflation Expectations.

Anticipating Economic Perspectives: Voices on the Horizon

• The BoE’s Haskel and Benford speak on July 8.
• The Fed’s Bowman and Barr are due to speak on July 9 along with BoE’s Cleland and Thuran. In addition, Chief Powell testifies before Congress.
• The RBA’s Simon, the ECB’s Nagel, the BoE’s Pill and Mann, along with the Fed’s Goolsbee and Bowman are all expected to speak on July 10. In addition, Chair Powell testifies before Congress.
• The Fed’s Bostic, Cook and Musalem speak on July 11.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The RBNZ meets on July 10.
• The Malaysian central bank (MNB) and the Bank of Korea (BoK) will decide on rates on July 11.