- The economic calendar will have several key events this week.
- The US nonfarm payrolls data will come out on Friday.
- Other key events are the Bank of England and Reserve Bank of Australia decisions.
July was a bad month for the US dollar index (DXY). It dropped by more than 4%, making it its worst month in more than a decade. On the euro, Norwegian krone, Swedish krona, sterling, and yen had their best months this year. So, will the dollar weakness continue? Let us look at the key events to watch in the economic calendar this week.
On Friday, the Bureau of Labour Statistics (BLS) will release the US nonfarm payrolls numbers from the US. Analysts polled by Reuters expect that the US economy created more than 1.65 million jobs in July after creating 4.8 million in the previous month.
If the analysts are correct, it will mean that the US has created 8.9 million jobs in the last three months. It will also mean that the economy is still yet to fill 11 million jobs that were lost during the pandemic.
The data will come at a time when the number of covid-19 cases in the US is rising. It will also come at a time when data from the BLS is showing that more Americans are filing for jobless claims data.
Other important US dollar related events in the economic calendar are initial jobless claims, manufacturing and non-manufacturing PMI, trade, and factory orders.
Bank of England interest rate decision
The British pound had a great July. The GBP/USD pair rose by almost 5% while the pound index rose by 5.10%. Will this trend continue? Perhaps, the answer could come on Thursday, when the Bank of England concludes its two-day monetary policy meeting.
Analysts expect that the bank will leave interest rates unchanged at 0.10%. Also, they see it leaving its quantitative easing plan intact since they already hiked the ceiling in the past meeting. Importantly, traders will be waiting for any indications of negative interest rates in the UK. While negative rates have worked well in other countries, analysts cautionthat they will be bad for the UK, which has a sizable financial sector.
Other events in the economic calendar are UK PMI data and the Halifax house price index.
RBA interest rate decision
The Reserve Bank of Australia (RBA) will start its monthly meeting on Monday and deliver its rates decision on Tuesday. The meeting will come at a time when the number of covid-19 cases is rising in Australia. It will also come when the AUD/USD pair has just soared by more than 3.2%. Analysts believe that while the RBA will sound cautious in this meeting, it will not tamper with interest rates. It will also maintain the yield curve control program.
Other key events in the economic calendar are the Australian PMIs, China’s trade data, AIG construction index, and the Chines manufacturing PMIs.
Japan GDP data
As the third-largest economy in the world, Japan is an important player in the global economy. Indeed, the Japanese yen is widely viewed as a safe-haven currency. In July, the USD/JPY pair dropped by more than 1% as investors rushed to its safety as the number of covid-19 cases in the US continued to rise. The rising tensions between the US and China also played a role.
This week, the USD/JPY pair will react to the Japan’s GDP data that will come out tomorrow. Analysts believe that the data will show that the economy contracted sharply in the quarter. On Tuesday, the statistics office will release the CPI numbers followed by overtime pay and household spending data.
There will be other key events in the economic calendar this week. On Tuesday, SECO will release the consumer climate survey data while the Turkish statistics office will release the July CPI data. On Wednesday, the Swedish statistics office will release the GDP and industrial production data. Meanwhile, we will receive the Canadian jobs data on Friday.