USD: Limited impact from positive jobs data
The biggest event for the USD last week was the release of Nonfarm Payroll data on Friday. The numbers beat analyst expectations, jumping the highest in eight months and calming investor fears after the dismal jobs data released in early June. The dollar, which had been slipping against major currencies before Nonfarm Payroll, strengthened afterward. But its gains have been modest and limited as markets continue to be doubtful that positive jobs data will be enough for the Federal Reserve to raise interest rates given ongoing global risk factors.
Looking ahead, retail sales figures will be released on Friday and will give an indication of US economic health. With a lack of other major data this week, the US dollar will continue being driven by sentiment around global risk factors.
EUR: Light data week
The euro saw some gains after UK’s political race narrowed to one candidate for Prime Minister, but overall the common currency has been trading relatively flat against the dollar for the last several days. Aside from the release of trade balance figures for the month of May on Friday, data for the Eurozone is light this week. Global risk sentiment and Bank of England announcements on Thursday are expected to have an impact on the euro this week.
GBP: Looking ahead to BoE meeting
The pound is seeing some gains after the race for the next British Prime Minister narrowed to one candidate today following more than two weeks of political infighting. While the news may instill a sense of political calm, risks still remain around the legal process for Britain to leave the EU and a potential General Election.
BoE will hold its first Monetary Policy Committee meeting this Thursday since the vote to leave the EU. While a policy change isn’t expected this month due to a lack of economic data following the referendum vote, the meeting will still be closely watched for indications of sentiment. Analysts anticipate that next month’s meeting could bring an interest rate cut and quantitative easing.
CAD and AUD: Oil and global risk factors have an impact
Despite a small and temporary lift from better than expected Canadian housing starts data this morning, the Canadian dollar, which is influenced by energy markets, is continuing its downward trend from last week as oil prices continue to be feeble. Both brent and US crude contracts fell over 7% last week as a result of stalling demand and current global economic outlook. Wednesday will be a crucial day for the Canadian dollar, with the Bank of Canada holding a press conference and releasing its monetary policy report and rate statement.
Meanwhile, the Australian dollar strengthened on Friday along with rising risk sentiment but is trading choppily today amid continuing fears of global slowdown. There will be a spate of economic data released on Wednesday, including employment change numbers and consumer inflation expectations. Chinese GDP figures, which will be released on Thursday, could also have an impact on the Aussie dollar.