This week is light on economic events for the FX market, with Monday showing minimal activity. On Tuesday, attention turns to Australia’s monetary policy meeting minutes and comments from Bank of England Governor Andrew Bailey.<\/p>\n
In the U.S., Federal Reserve Chair Jerome Powell will give opening remarks at a conference, as the Fed\u2019s blackout period begins ahead of the July 30 FOMC meeting. Wednesday sees U.S. existing home sales data, while Thursday delivers flash services and manufacturing PMIs for Japan, the eurozone, the U.K., and the U.S.<\/p>\n
The eurozone will announce its latest ECB monetary policy decision, and on Friday, Japan will release the Tokyo core CPI y\/y, the U.K. will publish retail sales m\/m, and the U.S. will focus on durable goods orders m\/m. Existing home sales in the U.S. are expected to slightly decline in June, while new home sales may see a rebound. <\/p>\n
The ECB is anticipated to maintain the deposit rate at 2.0%, with Wells Fargo predicting a future rate cut. The Tokyo core CPI y\/y consensus is at 3.0%. Despite moderating food prices, underlying inflationary pressures remain.<\/p>\n
In the U.S., durable goods orders are expected to drop significantly in June, largely influenced by a previous aircraft orders spike, while core durable goods orders may remain flat. Business equipment investment is likely to contract later in the year.<\/p>\n
With a light economic calendar, we expect low implied volatility early in the week, making it a time to set up positions rather than chase momentum. While Mr. Powell is in a blackout period, his remarks on financial stability could still be a source of unexpected market movement. We will be watching options pricing closely for any traders positioning for a surprise from his speech.<\/p>\n
We anticipate that Wednesday’s existing home sales data will confirm a cooling U.S. economy, as high interest rates continue to bite. Recent figures show the 30-year fixed mortgage rate has remained elevated, hovering near 6.89% in early July, which supports the consensus for a slight dip in sales. This sustained housing weakness reinforces our view that the Federal Reserve will be pressured to consider rate cuts later this year, a position we can express through interest rate futures.<\/p>\n
The sharp drop forecasted for durable goods orders on Friday will be a critical data point for us. We will disregard the dramatic headline number, which is distorted by a large Boeing deal in May, and focus on the core reading for signs of underlying business investment. A weak core figure would signal that companies are pulling back on spending, potentially creating selling pressure on industrial sector stocks and their derivatives.<\/p>\n
For the euro, we see the European Central Bank\u2019s decision to hold rates as a short-term stabilizing factor. However, the prospect of a future rate cut combined with the lingering threat of U.S. tariffs creates a clear downside risk for the currency in the medium term. This environment makes longer-dated put options on the EUR\/USD an attractive strategy to hedge against these potential headwinds.<\/p>\n
This week\u2019s most significant catalyst for the Japanese yen will be Friday’s inflation data from Tokyo. A print that comes in hotter than expected would challenge the market\u2019s current belief that the central bank will delay policy normalization, which could trigger a rapid strengthening of the currency. With the USD\/JPY pair recently trading at multi-decade highs near 160, we are prepared for significant volatility around this release.<\/p>\n
Regarding the British pound and the Australian dollar, we will be analyzing comments for subtle changes in forward guidance rather than reacting to big data points. The testimony from Governor Bailey and the release of Australia’s monetary policy minutes are events where policymakers’ tone can shift market expectations. We will carefully parse their language for any hints that either central bank is moving closer to or further from future rate adjustments.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Light week for FX: Key central bank updates, U.S. housing data, and global PMI figures dominate focus.<\/p>\n","protected":false},"author":62,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-26832","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/26832","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=26832"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/26832\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=26832"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=26832"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=26832"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}