- The RBA interest rate decision will be the biggest event in the economic calendar this week.
- On Monday, we will receive services and non-manufacturing PMI numbers from the US.
- Other key numbers will be Japan machinery orders, IEA energy outlook, and Canadian jobs data.
The US dollar declined slightly against peer currencies as traders reflected on the upbeat economic data from around the world. Manufacturing and services PMI numbers in most countries was better than expected while US nonfarm payrolls numbers zoomed past analysts’ forecasts. The Us dollar index fell by 0.58% while the euro index fell by 0.30%. Meanwhile, the British pound index rose by 1.37% as shown in the chart below. Let us look at the key events to watch in the economic calendar this week.
Reserve Bank of Australia decision
The RBA will start its monthly monetary policy meeting on Monday and release its decision on Tuesday. This decision comes at a time when the Australian economy is booming, as evidenced by the latest manufacturing and services PMI, tradeand retail sales. Therefore, analysts polled by Reuters believe that the bank will leave interest rate unchanged at 0.25% and sound cautious about the economy. Still, traders will be paying closer attention to Philip Lowe’s statement on negative interest rates and yield curve control.
Other important details in the economic calendar are AIG services index and home loans data.
ISM non-manufacturing PMI
On Friday, we received upbeat Eurozone, Australia,and UK services PMI numbers. On Monday, we will receive the services and non-manufacturing PMI numbers from the US. Analysts polled by Reuters expect the PMI to move to 50 because business activity has been picking up. They expect another data from Markit to show that the PMI rose to 46.7 from the previous 37.5.
While the June numbers are expected to be good, the biggest challenge for the US is that the number of coronavirus cases has been rising. On Saturday, the country reported more than 50,000 new infections, which was slightly below the 53,000 that were reported on Friday. As a result, most states have started to implement additional lockdowns while companies like Apple have closed their stores.
Japan machinery orders
Recent economic numbers from Japan have been relatively weak. Data released last week showed that the manufacturing and services PMIs were still in contraction mode in June. This week, we will receive additional numbers from the country. On Thursday, the statistics office will release machinery order numbers from Japan. Analysts expect that core machinery orders dropped by more than 17.1% in May after falling by 17.7% in the previous month.
Other important information in the economic calendar will be the June factory gate prices, leading index, household spending, and overtime pay among others.
Canadian employment data
The Canadian dollar rose against the US dollarbecause of the falling number of coronavirus cases, strong export and import data, and the stabilising crude oil prices. On Friday, Statistics Canada will release its June employment data. Analysts expect that the economy added more than 800,000 jobs in June after adding more than 289k jobs in May. Also, they expect that the unemployment rate dropped to 11.6% in June from the previous 13.7%.
Other numbers in the economic calendar will be the Ivey manufacturing PMI, building permits, and the Bank of Canada business outlook survey.
IEA energy outlook
As we have written before, crude oil plays an important role in currencies. This week, we will receive the monthly outlook from the International Energy Agency (IEA), the France-based organisation. This data will provide more information about global demand and supply. On Tuesday and Wednesday, we will receive information on US inventories from the API and EIA.
Other key details in the economic calendar
In addition, traders will watch out for the interest rate decision from the Bank of Malaysia, construction PMI from the UK, and German industrial production data.