FX: 10 Key Events to Watch This Week

FX: 10 Key Events to Watch This Week

Kathy Lien  | Jul 14, 2020 03:52

It’s a busy week in the foreign exchange market, and investors are kicking it off with gains for currencies and equities. Even as U.S. states report an alarming number of new cases and the death rates rise in almost every region, investors shrugged off all coronavirus worries. Their optimism is driven by reports that Pfizer (NYSE:PFE) and Germany’s Biontech Se (NASDAQ:BNTX) gained FDA fast-track status for two of their four vaccines. By speeding up the go-to-market process, these companies could enroll up to 30,000 patients for trials by the end of the month. And if those tests are successful, a vaccine could be developed by the end of the year. Nothing is more potent than a medical solution for the COVID-19 crisis which has affected all corners of society. We hope that the results will be positive, but in the meantime, the reality is that fresh stay-at-home orders may be needed in many states, including Florida, which reported a record 15,300 cases on Sunday – exceeding the worst day ever in New York by more than 3,000.

With that said, facts matter little when sentiment is skewed the other way. For the past month, investors have been nonchalant about the rise in U.S. coronavirus cases, and unless that changes, it has been more fruitful to buy the dips than sell the rallies.

This week’s U.S. economic reports should foster more optimism as inflation and consumer spending tick higher in June. Oil and gas prices increased last month and the low forecast for pickup in retail sales should be easy to beat because further reopenings in June should trigger an increase in spending activity. The same is true for housing. Building permits and housing starts should rebound, but sentiment could turn lower. While the other reports reflect June activity, the University of Michigan Consumer Sentiment index is a measure of confidence in July – a month when new cases started to rise and the nation was swept with fresh coronavirus concerns. Also, a number of U.S. companies report earnings and weak guidance could shift the mood in the markets. USD/JPY rallied for the first time in four trading days. The sustainability of its gains hinges on good data and good earnings.

Thursday’s U.S. retail sales report is one of the most important pieces of data this week but it's not the only market-moving event to watch. Here are the 10 key events to watch in order of potential impact on currency flows with an inclusion of the Fed’s Beige Book as a bonus.

1. U.S. Retail Sales
2. European Central Bank monetary policy announcement
3. Bank of Canada monetary policy announcement
4. Chinese Q2 GDP
5. German ZEW Survey
6. UK Employment
7. UK Retail Sales
8. Australian Employment
9. New Zealand PMI
10. New Zealand CPI
11. Fed’s Beige Book

No changes are expected from any of these central banks, but the euro is strong today and outpacing all other currencies because the European Central Bank is expected to be less pessimistic. Germany’s economic ministry said this morning that its economic low point has passed and France feels consumption is just 5% below normal levels. We expect this outperformance to continue ahead of the rate decision. Sterling on the other hand was one of the few high-beta currencies to trade lower against the U.S. dollar. Most of this week’s economic reports are for the month of May and the prospect of softer data could hold the currency back. All three commodity currencies traded higher, with the Australian dollar leading gains. We are surprised by A$ strength especially after China issued a travel advisory for Australia, a sign that tensions between the two countries are rising.

Kathy Lien

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.