The calendar below highlights the major market moving news that could impact the Forex market the trading week of July 21-25:
US: In the US CPI data on Tuesday is expected to show a 0.3% MoM gain, and YoY estimate of 2.1%. If it is materially higher, the market will likely start talking more about an earlier Fed tightening in 2015, and this should be supportive to the US dollar. Other focus will be on the Existing and New Home Sales data for June and Durable Goods Orders on Friday.
UK: In the UK the most important data will come out on Friday when GDP for the 2Q is expected to show a 0.8% gain. The last 4 quarters have shown 0.7% or better. This would be the 5th consecutive month of steady and solid growth. The BOE Carney speaks on Wednesday at 7:45 AM ET/11;45 AM GMT, and there are some who feel he might be gun shy when it comes to tightening. His tone may set the tone for the next major move in the GBP. If he is more hawkish the GBPUSD could start a move toward the 1.7330 area. If he is more dovish, a move through 1.7000 will be the path of least resistance for traders.
EU: German, France,and EU have Flash PMI come out on Thursday from 3:30 AM ET to 4:00 AM ET. The expectations are steady to higher for each. Spain's unemployment rate will also be released with estimate or 25.9% (unchanged from last month). This will be a reminder of the long road ahead but the market has already discounted their employment situation as well as most bad news for the EU. The expectation is for a lower EURUSD over time, but the market has been having a tough time pushing the price below the 1.3476 low for the year. If that can be breached, it opens the pair up for a move toward the 1.3375 level (midpoint of the move up from the July 2013 low).
NZD: One of the biggest events of the week will occur on Wednesday at 5 PM ET when the Reserve Bank of New Zealand is expected to raise their official cash rate for the 4th time this year to 3.5% from 3.25%. There is no meeting in August and there is an election in September. As a result, it may be that the RBNZ and Governor Wheeler let the market know that rates will be on hold for a while as they gauge the impact of the rate hikes to date. Comment on the value of the NZD will also likely be eyed by market participants. The NZDUSD fell short of the 2011 high price earlier this month (by 6 pips) and the price rotated lower last week on technical selling. The 100 day MA is being approached at the 0.8620 area. A move below that level will be more bearish for the pair.
AUD: CPI data for the 2Q will be released at 9:30 PM ET on Tuesday. Also Governor Stevens speaks on Monday and the combination will set the bias for the AUD this week. The Reserve Bank of Australia has expressed concerns about the high level of the AUD. CPI is expected to rise to the upper band of their target but it is largely due to oversized increases in CPI last year that will likely not be repeated going forward (i.e. it is transitory). Unemployment is at multi-year high levels and their has been weakness in Retail Sales and Trade over the last month. If the AUDUSD is to go down further from current level of 0.9366, I would NOT expect a rise back above the 0.9400 level.
JPY: In Japan the fundamental focus will be on the Trade Balance on Tuesday at 7:50 PM ET (-642.9B Yen deficit) and the CPI on Wednesday at 7:30 PM ET. The estimate for CPI YoY is expected to come in at 3.5% YoY for the headline and 3.3% YoY for the Ex Fresh Food. The CPI is being influenced by the Sales tax increase which pushed the YoY CPI up trom 1.6% to 3.4% in April. In May the CPI rose to 3.7% but the decline this month suggests that the desired inflation from Abenomics is not being manifested in the sluggish economy. Also a potential influence for the JPY this week comes out of the US and from geopolitical tensions. With a slew of earnings reports in the US being released and tensions in Ukraine and Israel, there could also be moves into the relative safety of the JPY if stocks get hit or tensions escalate. That appears not the be what is expected, but it s something to be aware and prepared.If it occurs a move toward the all important 100.00 level will becomes a focus.