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The British pound and commodity dollars all face high event risk from rate decisions by the Bank of England and Reserve Bank of Australian, along with Canadian employment and business activity reports. The US dollar could also feel the impact of the ISM non-manufacturing index, but ultimately, risk trends remain the primary driver of the safe-haven currency.
- US ISM Non-Manufacturing (JUN) - July 6
Conditions in US non-manufacturing sector - which accounts for approximately 70 percent of total economic activity in the country and includes retail, services, and finance - are anticipated to have improved somewhat in June as the Institute for Supply Management index is estimated to rise to 46.0 from 44.0. However, consumer confidence has shown emerging pessimism, primarily on the economic outlook, as the Conference Board's measure surprisingly fell to 49.3 in June from 54.8. Since risk trends have proven to be the greater driver of price action in the forex markets, a weaker than expected result could trigger flight-to-quality and thus, gains for the US dollar.
- Reserve Bank of Australia (RBA) Rate Decision - July 7
The Reserve Bank of Australia is anticipated to leave their cash rate target unchanged at 00:30 ET on Tuesday for the third straight month at 3.00 percent, and the Australian dollar may only respond to a surprise rate cut or a biased monetary policy statement. As it stands, Credit Suisse Overnight Index Swaps (OIS) are only pricing in a 10 percent chance of a 25 basis point reduction. After the central bank's last meeting, RBA Governor Glenn Stevens said that future rate cuts would be based on how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity. As a result, it will be important to look to Bollard's statement, as signs that the economy or financial markets are not holding up strongly enough for the RBA's liking may suggest that the central bank will consider cutting the cash rate target again, and this news could weigh on the Australian dollar. On the other hand, indications of a broadly neutral bias and comments suggesting that 3.00 percent is essentially the floor for the cash rate target could support the currency.
- Canadian Ivey PMI (JUN) - July 6
The June reading of the Canadian Ivey Purchasing Managers' Index (PMI) is projected to rise to 50.3 from 48.4, and since 50 is the point of neutrality for this index, such a result would indicate that business activity expanded during the month, albeit very slightly. However, only a sharper-than-expected increase or surprise decline may have an impact on price action for the Canadian dollar, but overall, there's little evidence to suggest that PMI will rose significantly, leaving downside risks open for the Canadian dollar.
- Bank of England (BOE) Rate Decision - July 9
The Bank of England is expected to leave rates unchanged for the fourth straight month on July 9 at 7:00 ET at an all-time low of 0.50 percent. The central bank's last policy statement essentially signaled a neutral stance, as no expansions to their quantitative easing (QE) program have been revealed. That said, the final reading of Q1 GDP for the UK was unexpectedly revised down to an annual rate of -4.9 percent, the lowest since recordkeeping began in 1956, from -4.1 percent. This leaves GDP at the bottom of the BOE's previous range of forecasts, and may push them to consider increasing the scope of their QE program, and signs that this is occurring within the BOE's policy statement on Thursday could weigh heavily on the British pound.
- Canadian Net Employment Change (JUN) - July 10
At 7:00 ET, the Canadian net employment change may show a decline of 40,000 during June following a drop of 41,800 in May. Furthermore, the unemployment rate is anticipated to have risen to match the January 1998 high of 8.7 percent from 8.4 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Canadian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.
See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.
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