FX Week Ahead – Top 5 Events: Chinese and US Manufacturing PMI; Eurozone inflation; US NFP and unemployment rate; Public holiday in the United States
Preview of the coming week on currencies:
- The last days of June and the first days of July give rise to a mixed macro-calendar: not many well-rated events and a holiday in the United States for Federal Day.
- Even though US financial markets have half a day on Friday, July 2, the June US NFP report will be released, allowing traders to assess the state of the recovery in the US labor market.
- Overall, recent changes in retail trader positioning suggest that the US dollar has a mixed bias.
For the whole week ahead, please visit the DailyFX Economic Calendar.
29/06 / TUESDAY | 21:00 GMT | CNY NBS Manufacturing PMI (JUNE)
There are signs that the world’s second-largest economy is starting to calm down. China’s credit impulse (credit growth as a percentage of Chinese GDP) has started to fade, which has historically aligned with lower PMI readings. Indeed, the next data publication is to show that the Chinese manufacturing sector is still growing, but like a slower pace. Aaccording to a Bloomberg News poll, the June China NBS Manufacturing PMI Expected to Cross the Line with a Reading of 50.8, down from 51.0 read in May. Even a slight deceleration in Chinese PMI readings can prove problematic for major currencies like the Australian and New Zealand dollars.
06/30 WEDNESDAY | 05:00 GMT | Flash inflation rate in EUR (JUN)
the shine June Eurozone Inflation Rate (CPI) Report is the main topic of interest for the euro this week alongside the speeches of ECB President Christine Lagarde on June 29 and July 1. Inflation data is expected midweek, and aAccording to Bloomberg News, Eurozone inflation reading is expected at +1.9% of +2.0% (y / y), while the carrot reading is due to +0.9% of +1.0% (a / a).
With inflation expectations have declined in recent weeks – since their annual high on May 18 at 1.643%, 5-year to 5-year inflation swaps fell by –7-bps to 1.575% – he It looks like the ECB will continue to beat the ‘lower for longer’ drum, which can turn out to be an albatross for most euro crossovers in a world where many other major central banks are moving closer to standardization.
07/01 THURSDAY | 1:45 p.m., 2:00 p.m. GMT | USD MARKIT MANUFACTURING PMI (JUNE), ISM MANUFACTURING PMI USD (JUNE)
The American economy continues to grow at a steady pace, at least in manufacturing, which accounts for about 12% of all jobs in the United States. The two industry readings provided by Markit IHS and the Institute of Supply Managers (ISM) suggest that June’s activity kept pace with May’s frenzied pace. The Markit Manufacturing PMI survey should be 62.6 of 62.1, while the ISM manufacturing PMI is expected at 61 from 61.2. Cumulatively, running at a pace close to 60 suggests that U.S. economic data dynamics are improving as vaccination efforts Advanced, suggesting that the near-term outlook for corporate earnings remains strong.
07/02 FRIDAY | 12:30 GMT | NON-AGRICULTURAL PAYROLL AND UNEMPLOYMENT RATE (JUNE)
The main problem for the US dollar when it comes to the June The US Nonfarm Payrolls report is whether the US labor market has regained its momentum after a stumble in consecutive intercourse in April and maybe report. April print is here at + 266K against an expectation of + 1000K (or + 1M) jobs added, while the May reading registered + 559K versus the expected 650K.
The jerks of the full reopening of the US economy do not seem to deter forecasters from forecasting a rebound in the outlook for the US labor market, as declining unemployment claims and rising vaccination rates auspicious for the potential of the US labor market. Forecasters are looking for + 700K job growth, according to a Bloomberg News survey, while the unemployment rate (U3) is expected to drop from 5.8% to 5.6%. Meanwhile, the participation rate of the US workforce is due to a meager 61.7%.
Even though there is good data on employment, there is still a long way to go before the United States reaches âfull employmentâ as the pre-pandemic experienced. Atlanta Fed’s job growth calculator says U.S. economy needs +740Growth of K jobs per month over the next 12 months in order to return to the pre-pandemic US labor market with an unemployment rate of 3.5% (U3) with an activity rate of 63.4%.
07/02 FRIDAY, 07/05 MONDAY | Financial markets in USD are closed for a federal holiday
U.S. Independence Day of July 4 falls on a Sunday this year, which means federal observations will take place between Friday July 2 and Monday July 5. As a result, US financial markets will operate on a single schedule which will result in lower trading volumes; especially after the June US NFP report on Friday, there could be a sharp drop in market activity.
– On Friday July 2, US bond markets close at 14 EDT / 18 GMT. During this time, the US stock markets will have normal trading hours.
– On Monday July 5, the US bond markets and US equity markets will be closed all day.
In fact, after the US employment report on Friday, traders might find it not worth resuming trading until Tuesday, July 6 given the lack of liquidity on Monday.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist