USD: Will jobs reports lift the dollar for a second week?

The US dollar rose last week mostly thanks to stronger-than-expected new home sales and an upward revision in Q2 GDP growth, but also thanks to the greenback’s perceived status as a “safe haven” currency compared to the euro, which faced uncertainty with the Deutsche Bank concerns.

The greenback is carrying its upward momentum into this week with two stronger-than-expected manufacturing readings for September from ISM and Markit. On Tuesday morning we’ll see how the retail sector did in same-store sales for September and get the IBD/TIPP Economic Optimism survey to see how upbeat consumers are for the economy over the next six months. Wednesday will be busy with August’s trade balance and factory orders data, September’s jobs report from ADP (analysts expect 165,000 new jobs for the month), and the latest non-manufacturing business activity readings. Thursday we’ll get the weekly jobless claims and job cuts data, while Friday brings the coveted nonfarm payroll and unemployment reports for September. With optimism still running fairly strong for the US economy, a disappointing jobs report on Friday could reduce the odds for a Fed interest rate hike in 2016 and send the dollar lower before the week’s end.

EUR: Deutsche Bank jitters and business activity reports will test the euro this week

The euro ended lower against the rising US dollar last week largely as financial concerns around Deutsche Bank (Germany’s largest bank) fueled talk of a government-backed bailout and signaled a potentially systemic problem for the banking sector. That said, German retail sales results and a string of consumer inflation/spending data and employment numbers out of France, Italy, Greece, and the broader Eurozone came out mostly in line with expectations, which signaled a still-resilient Eurozone and helped to break some of the euro’s fall.

The shared currency is stumbling into this week against the US dollar despite stronger-than-expected manufacturing output out of Italy, France, Germany, Greece, Spain, and the broader Eurozone. We’ll see more readings on the pace of the region’s growth with Tuesday morning’s Eurozone producer inflation data and Wednesday morning’s retail sales and non-manufacturing business activity readings for each of the major Eurozone countries. Thursday morning brings German factory order data followed by comments from the European Central Bank on the Eurozone’s financial, economic, and monetary developments. Friday’s industrial production readings out of Germany and trade balance data from Italy will finish out the week. If the results from this week signal anything less than a resilient Eurozone, the chances for more central bank stimulus could go up and therefore weaken the euro for another week.

GBP: Will strong business activity buck a potential fourth-week slump?

The pound finished its third-straight week lower against the rising US dollar with mixed borrowing results out of the UK. August’s consumer credit results showed more individual borrowing than expected while mortgage approval activity shrank slightly more than analysts had anticipated, despite mortgage rates falling near record lows. Revised Q2 data showed the UK’s GDP growing a slightly stronger than expected 0.7%, however, which helped support the pound a bit during the week.

As with the Eurozone, we’ll see a variety of business activity results out of the UK this week that could affect the pound. Sterling is off to a rough start already, falling to fresh post-Brexit lows on Monday morning as British Prime Minister Theresa May released more information about the UK’s not-fully-resolved plans to leave the European Union starting in Q1 2017. Tuesday morning will show us UK construction sector activity – which is expected to show some contraction – while the afternoon will bring price data from the UK’s top retailers for September. Wednesday will be light with just a services sector activity report from Markit in the morning, while Friday will be busy with housing prices, manufacturing/industrial production, and trade balance data for August all coming out. The multiple business activity readings out this week for the UK may have to significantly beat analyst expectations to pull the pound out from its post-Brexit lows.

CAD and AUD: Will the Loonie continue rising with oil this week? Will the Aussie dollar stay attractive?

The Canadian dollar ended higher against its US counterpart for a second consecutive week after an announcement that OPEC would finally cut its oil production pushed oil prices closer to $48 per barrel. Canada’s economic reports were more mixed: industrial product prices shrank more than analysts predicted during August, while the country’s GDP grew a stronger-than-expected 0.5% in July. The Loonie is starting this week off choppy with barely-growing manufacturing output for September and volatile (albeit still-rising) oil prices. Tuesday will be quiet data wise, while Wednesday morning will bring August’s export/import trade data and Thursday will show August’s building permits growth. Friday morning will cap off the week with September’s employment results, Ivey’s manufacturing sector confidence survey, and a business outlook survey from the Bank of Canada. Barring any big surprises on Friday (or from the little data available this week), the Canadian dollar could move largely in line with oil prices, as it tends to do.

The Australian dollar climbed for a second consecutive week against the US dollar as investors began to believe the Federal Reserve would be slow to raise interest rates and were more attracted to the Aussie dollar’s higher yield. Rising oil, iron ore, and milk prices also helped buoy the currency last week. The Aussie dollar is off to a strong start this week as investors await Monday night’s interest rate decision from the Reserve Bank of Australia along with job advertisements readings and building permits data. Tuesday will bring commodity price forecasts in the morning and August’s services sector and retail sales data at night. Wednesday evening will show us trade data for August, while Thursday night will round out the week with Australia’s construction sector forecast. Analysts already anticipate slow growth or contraction out of some of these reports this week, so weaker-than-expected results could particularly hurt the Aussie dollar’s strength.