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Forex Major Currencies Outlook (July 22 – July 26)

ECB rate decision will dominate the week ahead of us accompanied by preliminary PMI figures for the month of July, election of the new UK Prime Minister and US Q2 GDP data.


Retail sales for the month of June came in at 0.4% m/m vs 0.2% m/m as expected with prior reading being revised down to 0.4% from 0.5%. Core retail sales were particularly strong coming in at 0.7% m/m vs 0.3% m/m as expected with prior reading being revised up to 0.6% from 0.4%. US consumers are still going strong and this reading will raise GDP projections for Q2 that will be published next week. Atlanta FED raised Q2 GDP forecast to 1.6% from 1.4% before the report.

FED’s Williams gave a speech with very dovish tones stating that it is better to react prematurely than late which weakened the dollar mentioning even neutral rates at 0.5%. FED funds futures were pricing in a 59% chance for 50 bps cut in July. Later on, the NY FED said that Williams’s speech was not about potential policy actions at the July FOMC meeting, it was an academic speech based on research which lowered the chances of 50 bps rate cut to around 42%.

This week we will have housing data, preliminary PMI numbers for the month of July, data on durable goods and preliminary Q2 GDP reading.

Important news for USD:


  • Existing Home Sales


  • New Home Sales
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • Durable Goods Orders


  • GDP


Trade balance for the month of May came in at EUR20.2bn vs EUR17.8bn as expected and big jump from EUR15.7bn the previous month. Exports grew 1.3% m/m, always a good thing for export-oriented economies, while imports fell 1.1% m/m which raises some concerns about domestic demand. German ZEW survey of the current situation for the month of July came in at -1.1 vs 5 as expected and 7.8 the previous month. A drop into negative territory and weakest reading in almost a decade. Expectations for German economy dropped to -24.5 from -21.1 the previous month and Eurozone expectations slipped to -20.3 vs -20.2 the previous month. Pessimistic numbers for the start of Q3, signalling missing expected rebound in H2. Final CPI for the month of June came in at 1.3% y/y vs 1.2% y/y preliminary while core held its ground at 1.1% y/y as preliminary reading showed.

Ursula von der Leyen, former German minister of defence who is considered a key and close ally of Chancellor Angela Merkel, has been narrowly elected president of the EU Commission, becoming the first woman to fill the post and the first German at the helm in over half a century. She received 383 votes while 374 votes where needed to confirm her appointment.

This week we will have preliminary PMI numbers and consumer confidence for the month of July, ifo business climate from Germany and highlight of the week will be ECB rate decision. Overnight index swaps are showing that markets price in an 85 percent probability of a rate cut by the September meeting. Further talks about monetary easing are expected and they can drag the euro down.

Important news for EUR:


  • Consumer Confidence Index


  • Markit Manufacturing PMI (EU, Germany, France)
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)


  • Ifo Business Climate (Germany)
  • ECB Interest Rate Decision
  • ECB Monetary Policy Press Conference


Employment change for the month of May came in at 28k vs 45k as expected. The unemployment rate stayed at 3.8% while claimant count rose to 38k from 24.5k the previous month which is the highest number in a decade. Average weekly earnings beat the expectations coming in at 3.4% 3m/y vs 3.1% 3m/y as expected. When calculated in real terms, average weekly earnings came in at 1.4% 3m/y for the fastest growth since October 2015. The employment report was on the strong side but we have entered Q3 and Brexit uncertainties still loom over so its effect was not supportive of GBP.

Inflation came out flat in the month of June as was expected. CPI was 2% y/y as expected and core CPI was 1.8% y/y as expected and it ticked up from 1.7% y/y the previous month. ONS stated that motor fuel prices fell on the month but rose relative to a year ago thus helping to offset the decline in clothing prices and keep the inflation flat for the month. Retail sales beat expectations by coming in at 1% m/m vs -0.3% m/m as expected with reading from the previous month being revised down to -0.6% m/m. Year over year figure came in at 3.8% vs 2.6% as expected. ONS notes growth in non-food stores was the main contributors to the rise in retail sales. Retail sales excluding auto fuel were also very strong which means that underlying demand is robust. Food stores sales fell for the first time this year and department store sales continued to decline in Q2.

The race for the leader of Tory party and PM of the UK ends on July 23. Boris Johnson who will very likely become the new PM next week stated that plans to hold an early election “while Jeremy Corbyn is still around” thus considering Corbyn for an unfit opponent. The Benn amendment has been passed in Parliament. The Benn amendment will require parliament to be recalled in September and October thus preventing the possibility of no-deal Brexit by running out the clock until October 31.

This week on Tuesday July 23 we will find out who will be UK’s new Prime Minister, Boris Johnson or Jeremy Hunt. The new PM will have a tough task of navigating the country through the Brexit mess.


Apart from Q2 GDP which came in at 6.2% y/y as expected Chinese data came stronger than expected including quarterly measure of GDP which came in at 1.6% q/q vs 1.5% q/q as expected. Q1 GDP came in at 6.4% and reading of 6.2% represents the slowest growth in almost 30 years. Retail sales for the month of June came in at 9.8% y/y vs 8.5% y/y as expected. This is a big beat propped by rising car sales. Industrial production came in with a bang at 6.3% y/y vs 5.2% y/y. During increasing global tensions and global slowdown Chinese industrial production did not back down. Fixed asset investments came in at 5.8% y/y vs 5.6% y/y as expected.

RBA meeting minutes emphasized importance of labour market conditions when considering further rate cuts. Employment change for June came in at 0.5k vs 9k as expected. The unemployment rate and participation stayed the same at 5.2% and 66% respectively. Full time employment came in at 21.1k while part time employment was down 20.6k. A soft headline number but the steady unemployment rate buys RBA more time so they can wait with further rate cuts.

This week we will have Q2 inflation data which is expected to rise and speech from RBA governor Lowe.

Important news for AUD:


  • CPI
  • RBA Governor Lowe Speech


Inflation for the Q2 came in as expected at 0.6% q/q and 1.7% y/y. Prior readings showed 0.1% q/q and 1.5% y/y. The biggest contributor to the inflation were fuel prices. RBNZ’s core inflation reading came in at 1.7% y/y, same as the previous quarter. GDT price index came in at 2.7% thus breaking the trend of four consecutive negative auctions.

This week we will have trade balance data.

Important news for NZD:


  • Trade Balance
  • Exports
  • Imports


CPI for the month of June came in at 2% y/y as expected and down from previous month highs of 2.4% y/y due to drop in gasoline prices. If we exclude energy CPI came in at 2.6% y/y. The main contributors to inflation were food prices which came in 3.5% y/y, fresh vegetables rose 17.3% y/y. Regarding the core measures median came in at 2.2% y/y vs 2.1% y/y as expected, common came in at 1.8% y/y as expected while trimmed came in at 2.1% y/y vs 2.2% y/y as expected. Strong numbers that are in line with BOC’s expectations and while they will keep monetary policy makers happy as they will not make them stir away from the current course.

Manufacturing sales for the month of May came in at 1.6% m/m vs 2% m/m as expected but still up from -0.4% m/m the previous month. Sales were up in 12 of 21 industries, representing 66.2% of total Canadian manufacturing, with transportation equipment making the biggest turnaround coming in at 8.1% vs -5.8% the previous month. Inventory levels were up in 13 of 21 industries, with the largest increases being energy in storage. Retail sales came in at -0.1% m/m vs 0.3% m/m as expected thus making the first miss in the long line of data beating the expectations. Retail sales have risen in previous four months. Ex autos category came in at -0.3% m/m vs 0.3% m/m as expected. Sales were down in 4 of 11 subsectors. The biggest drop was in food and beverage stores which dropped 2%. Interestingly, sales at cannabis stores rose 14.8% marking the third consecutive month of double-digit growth.

This week we will have data on wholesale sales.

Important news for CAD:


  • Wholesale Sales


Trade balance for the month of June came in at JPY589.5bn vs JPY403.5bn and up from -JPY968.3bn the previous month. Exports fell -6.7% y/y vs -5.4% y/y as expected which is the seventh consecutive month of dropping exports. Imports plunged -5.2% y/y from -1.5% y/y the previous month. These numbers show very weak trading activity from Japan and only because of a huge drop in imports the balance showed a surplus.

National CPI for the month of June came in at 0.7% y/y as expected. CPI excluding fresh food came in at 0.6% y/y as expected but down from 0.8% y/y the previous month. CPI excluding fresh food and energy came in at 0.5% y/y as expected. Inflation remains stubbornly low, not moving in the desired direction towards the 2% target thus giving more incentives for further easing of monetary policy.

This week we will have preliminary PMI numbers for the month of July as well as inflation data for the Tokyo area.

Important news for JPY:


  • Markit Manufacturing PMI
  • Markit Services PMI


  • CPI


Trade balance for the month of June came in at CHF4.1bn vs CHF3.4bn the previous month. Exports were up 0.1% m/m vs -1.2% m/m the previous month while imports were down -1.4% m/m vs 0.7% m/m the previous month. The rise in trade surplus was caused by slowdown in domestic demand.

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+3 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets.
Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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