Forex Weekly Outlook – August 7-11 2017

The US dollar remained on the back foot. Where will this stop? The upcoming week features US inflation figures, the JOLTs data, a rate decision in New Zealand and more. Here are the highlights for the upcoming week.

The US dollar suffered from further chaos in the White House. Anthony Scaramucci joined Reince Priebus in the long list of ex-staffers. Together with another failure of the health bill, the dollar suffered another round of losses. The euro took advantage as GDP growth looked good in the euro-zone[1]. The pound wobbled on the BOE. USD/CAD seemed to have taken a much needed pause as oil prices topped out. The Aussie also struggled as the RBA left its forecasts unchanged[2].


  1. US JOLTS Job Openings: Tuesday, 14:00. The number of job openings serves as another indicator of the health of the job market. While it lags the NFP, the Fed told markets it is of high importance. After beating expectations for quite a few months, May’s number was a setback: a drop to 5.67 million annualized. A small gain is on the cards now.
  2. Chinese inflation figures: Wednesday, 2:00. The world’s second largest economy is seeing rising costs for producers, with the PPI advancing at 5.5% y/y. CPI is lagging behind with 1.5%. China often “exports” inflation or deflation. The recent rises imply higher inflation in other countries, especially in the US.
  3. US Unit Labor Costs: Wednesday, 12:30. This quarterly measure serves as another indicator for wages or inflation. Higher costs of labor could trigger an earlier rate hike. In Q1 2017, costs rose by 2.2% in the final read after an initially strong read for of 3%.
  4. Crude Oil Inventories: Wednesday, 14:30. The weekly report has a significant impact on oil prices, the Canadian dollar and also the US dollar, with an inverse correlation on the latter. The recent rise in oil prices goes hand in hand with the fall of the US dollar.
  5. New Zealand rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand has maintained the interest rate at 1.75% since the cut last November. The recent disappointing jobs report[3] means no imminent rate hike is on the cards. The RBNZ and Governor Graeme Wheeler have tried to talk down the kiwi. Will they succeed this time as well? The jobs report provides a justification.
  6. US PPI: Thursday, 12:30. Producer prices eventually feed into consumer prices. In June, PPI advanced by 0.1% and so did Core PPI, all in all within expectations. Small gains are expected now as well.
  7. US jobless claims: Thursday, 12:30. This weekly barometer of jobs has been very stable of late, coalescing around 240K. A similar measure is on the cards now. Note that the report falls within the week that the BLS makes its survey for the NFP.
  8. US CPI: Friday, 12:30. Jobs are rising but inflation is stuck behind[4]. CPI remained flat month over month in June and core CPI advanced only 0.1%. On a year over year basis, inflation remained subdued at 1.7%, the same as in May.

*All times are GMT

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