DailyFX.com -

Talking Points:

  • US Dollar Faces a Heavy Week of Economic Data with FOMC, US 2Q GDP and NFPs taking the Lead
  • Euro Inflation Continues to be the Focus for Market Participants
  • Weekly Trading Forecast: FX Markets Brace for US GDP, NFPS and FOMC


Wednesday may prove to be a pivotal week for the US Dollar as two pieces of economic data could have a meaningful impact on interest rate expectations and risk trends. First, the second quarter US growth report (US 2Q GDP) is released and expected to show economic output rose at a pace of 1.4 percent in the second quarter. Notably, last week the IMF downgraded its 2014 growth forecast sharply to 1.7 percent from 2.8 percent, but it seems that market participants and the Fed remain hopeful for a sharp rebound in the 2Q. Later in the day, the US Federal Open Market Committee (FOMC) is expected to continue with its pace of tapering another 10 billion in asset purchases. The FOMC will not be providing an update to their employment, inflation or interest rate forecasts nor will Chairwoman Yellen be giving a press conference. With this in mind, the spotlight turns to the monetary policy statement where market participants will parse through the words to gauge the Fed’s tone and outlook.

Suggested Story: US Dollar Turn Can Forge Trend on Fed Decision, NFP’s, 2Q GDP

Suggested Story: US Dollar Technical Analysis: Prices Push to 5-Week High

US 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this Week

US 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this Week

Two pieces of economic data may spark volatility in the Euro currency during the European trading session on Thursday. Germany’s July labor market report is expected to show the economy lost 5,000 jobs while the unemployment rate remains unchanged at 6.7 percent. What may peak trader’s interest is Eurozone’s consumer price index report that is expected to show inflation unchanged at 0.5 percent in the month of July. Moreover, this may show the European Central Bank’s latest stimulus measures have had little impact. Despite last week’s Eurozone, German, and French PMI surveys that beat expectations, providing a short-term relief rally it seems the market remains focused on the weak inflation component (output prices) of the Eurozone composite PMI. With output prices reporting below 50, it may suggest that inflation remains market focus.

Suggested Story: Euro’s Low Growth, Disinflationary Rut Weighs on Traders

Suggested Story: EUR/USD Technical Analysis: Continuing to Hold Short

Canada GDP.

The Canadian Dollar has fallen against its major peers on concerns of Canada’s economic outlook. Last week the loonie sank to a five-week low against the US Dollar. The turn of events come after the Loonie enjoyed a rally due to a rise in consumer prices. Inflation rose past the central bank’s 2 percent inflation target over the course of two months. Despite a rise inflation, economic figures have weighed on the Loonie as they show that Canada is lagging behind its US counterpart. Further fueling the pessimism is the Bank of Canada that cut its growth forecast on July 16th, saying the nation’s economy is not expected to reach its full capacity until mid-2016. The latest employment report showed the labor market unexpectedly shrank in June. On Thursday, Canada is to show the economy grew 2.3 percent in May.

Suggested Story: USD/CAD Trades into March High Trendline as BoC Talks Down Economy

Suggested Story: Canadian Labor Market Disappoints in June, USD/CAD Rips

US 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this WeekUS 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this WeekUS 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this Week

The market ends the week facing a high-profile event that may induce volatility across the major currencies. US Non-Farm Payrolls (NFPs) for July is expected to show 231,000 jobs were added to the economy. The outcome would mark the sixth consecutive month that the economy added more than 200,000 jobs in the economy.

US 2Q GDP, FOMC and NFPs Take the Reins on High Event Risk this Week

Suggested Reading: USD/JPY Rallies to Multi-Week Highs, but What Could Force it Higher?

David Maycotte, DailyFX Research Teamemail me at dmaycotte@fxcm.com

Twitter: @davidmaycotte

Rate Hike Probabilities / Basis Points Expectations

Keep up to date on event risk with the DailyFX Calendar.

Related Articles
  1. Mutual Funds & ETFs

    Top 3 Japanese Bond ETFs

    Learn about the top three exchange-traded funds (ETFs) that invest in sovereign and corporate bonds issued by developed countries, including Japan.
  2. Savings

    Become Your Own Financial Advisor

    If you have some financial know-how, you don’t have to hire someone to advise you on investments. This tutorial will help you set goals – and get started.
  3. Investing Basics

    6 Reasons Hedge Funds Underperform

    Understand the hedge fund industry and why it has grown exponentially since 1995. Learn about the top six reasons why the industry underperforms.
  4. Mutual Funds & ETFs

    Top Three Transportation ETFs

    These three transportation funds attract the majority of sector volume.
  5. Investing Basics

    Tops Tips for Trading ETFs

    A look at two different trading strategies for ETFs - one for investors and the other for active traders.
  6. Mutual Funds & ETFs

    Top 4 Investment Grade Corporate Bonds ETFs

    Discover detailed analysis and information about some of the top exchange-traded funds (ETFs) that offer exposure to the investment-grade corporate bond market.
  7. Mutual Funds & ETFs

    Top 5 Emerging Market ETFs

    Find out which emerging markets ETFs have enough of an asset base, trading volume and low fees to be considered top choices in the segment.
  8. Mutual Funds & ETFs

    How to Profit From Market Volatility Using ETFs

    Volatility funds offer exposure to high greed and fear levels while avoiding predictions on price direction.
  9. Mutual Funds & ETFs

    The Best Currency ETFs

    We look at the best currency ETFs for gaining exposure to various global currencies, based on daily volume and performance.
  10. Chart Advisor

    Trade Base Metals With These 3 ETFs

    News out of Alcoa is causing active traders to turn toward base metals for opportunities. Before diving into the market, check out the charts of these three ETFs.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  6. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!