End of the week in sight for the forex markets

David Hobart

As the foreign exchange trading week draws to a close, it’s time to see what Friday and early next week will hold.

Tomorrow (Friday) will kick off with a series of data releases from Australia. Retail sales for June will be out at 1.30am GMT, and month on month this is expected to show a shift upwards from 0.1% to 0.3%.

The producer price index for the second quarter of the year will be out at the same time, and quarter on quarter this is expected to show a drop from 0.4% to 0.3%. Year on year, however, this metric is expected to remain the same at 1.9%.

Europe will wake up at 6.30am to news of a Swiss consumer price index for July. Year on year, this metric is expected to show a slight drop from 0.6% to 0.5%.

Italian industrial output for June is due at 8am GMT and is expected to show a year on year change from -0.7% to -2.1% – a significant change, if it comes through.

Analysts expect that the Markit construction purchasing managers’ index out of Britain at 8.30am will show a rise from 43.1 to 46.0, covering July. This would be a piece of welcome news for the British economy, which has recently been beset by political instability and disappointing performance.

The morning’s big event will be a Europe-wide retail sales data release covering June, which will be out at 9am GMT. Year on year, this is expected to cling on at 1.3%, although month on month it is forecast to show a significant rise from -0.3% to +0.2%.

Over in the US at lunchtime, there’ll be a series of data releases covering the employment markets. Nonfarm payrolls for July will be out at 12.30pm GMT, and this release is expected to show a shift downwards from 224,000 to 164,000.

The immediate effects of somewhat negative data releases such as this, however, are likely to be restrained given that the Federal Reserve’s interest rate decisions, which can be swayed by releases like these, has been and gone quite recently.

This negativity could well be neutralised by overall average hourly earnings for the same month, which are due out at the same time. Year on year, this forecast to show a slight rise from 3.1% to 3.2%.

The overall unemployment rate is forecast to hold firm at 3.7%, too, suggesting that there is, at least for now, some sense of stability in American labour markets.

Trade balance data for June is also released at this time, as is labour force participation rate data for July.

Lunchtime will also be a busy period of the day over the border in Canada. Imports data for June will be out and is expected to show a change from its previously recorded position of $52.34 billion dollars to $51.80 billion dollars.

June’s exports in this oil-rich economy are forecast to show a change from $53.11 billion to $51.50 billion when they are published at the same time.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

David Hobart
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