The Japanese yen was the top performing currency last week, gaining 2.09% to the US dollar. The risk aversion sentiment last week was clear with Gold prices also seen gaining strongly. The AUD and the NZD interestingly also gained.

Weekly Spot FX Performance – 08/07/2016

The slump in oil prices was evident as the commodity pulled down the oil currencies. The Canadian dollar managed to keep the declines to a minimum, losing 0.94% but it was more evidenced in the NOK which closed 2.53% lower against the US dollar. The British sterling was also weaker down 2.27%.

Economic Calendar for the Week 27/06 – 01/07

Time: GMT+1

Currencies/Events to Watch this Week

AUD: From Australia, the main event this week will be the monthly jobs report. Median forecasts estimate a 10.1k net job gain added to the economy, a modest estimate following May’s 17.9k net job gains. The unemployment rate is expected to rise to 5.80% in June, after staying put for three months at 5.70%. Other data over the week includes the MI inflation expectations which are recorded at 3.50% at the latest reading. Home loans are forecast to fall 1.90% on the month, consistent with the cooling down of the housing markets in Australia as seen by a fall in new home sales and building permits over the past weeks.

NZD: A rather slow week for the New Zealand dollar, the only economic release of interest is next Sunday’s quarterly inflation data. The lack of data is likely to keep NZD prone to technical trading than the fundamentals, which has already managed to post strong gains last week as expectations for an RBNZ rate cut continue to fade.

CNY: Economic data from China this week is busy. The markets look forward to the quarterly GDP data on Friday, which is expected to show the economy grow at a pace of 6.60%, slightly below 6.70% growth seen previously. Industrial production data will also be released and is expected to moderate to 5.90% growth on a year over year basis, compared to 6.0% seen previously. Trade balance data is expected to show a 46 billion in US dollar denominated terms.

JPY: No major releases are in store for Japan this week. The markets will, of course, come to learn how the weekend elections fared. BoJ’s policy meeting later in July will likely remain in focus. Industrial production data is expected to fall 2.20% on the month, down from 2.30% previously, while producer price index is expected to remain negative, falling 4.10%, compared to 4.20% declines previously.

EUR: The Eurogroup meetings get underway this week again, and the markets could remain on edge in the event of any new information regarding the Brexit. Germany’s final inflation numbers are expected to confirm a 0.10% increase in the headline inflation month over month while French final CPI data is expected to show a 0.20% increase on the month. Eurozone industrial production numbers will be released on Wednesday and forecasts call for a 0.80% decline after rising 1.10% previously. The final inflation figures will be confirmed this week and could show that the Eurozone headline inflation increased 0.10% on the month while core CPI is expected to rise 0.90% on a year over year basis.

GBP: Focus shifts to the UK, which will see the BoE’s inflation report hearings on Tuesday. However, the Bank of England’s meeting on Thursday will be in focus. Expectations are strong that the Bank of England could cut interest rates by 25bps at this week’s meeting. However, it could be a very close call given that a rate cut could be more of a proactive policy move than responding to deteriorating economic conditions. Construction output follows on Friday, but it is unlikely to garner much attention. On Friday, BoE Governor Mark Carney is scheduled to speak and could keep the GBP significantly under pressure.

CAD: In Canada, the BoC monetary policy meeting is due on Wednesday. Expectations call for no change in Canada’s interest rate which currently stands at 0.50%. Economic data has been fairly modest consistent with the view that no policy changes will be made this week.

USD: Busy week for the US dollar as various Fed members are scheduled to speak over the week. In terms of economic data, after a relatively slow week, Thursday will see the producer price index which is expected to rise at a slower pace of 0.30%, compared to the previous month’s 0.40% increase. Core PPI data is also expected to rise 0.10%, slower than 0.30% increase seen a month before. On Friday, inflation figures are forecast to show a 0.20% increase in both the headline and the core CPI. Retail sales data is expected to show moderation, rising 0.10% after surging 0.50% the month before.