The coming week will bring a major test for the US dollar (USD), with investors focusing on the US Consumer Price Index (CPI), Federal Reserve (Fed) Chairman Kevin Warsh’s congressional testimony and a broad set of activity indicators. China’s second-quarter gross domestic product (GDP) and the Bank of Canada’s (BoC) interest rate decision will also attract significant attention.
The U.S. Dollar Index (DXY) is hovering near 101.00, recovering from a one-week low on Friday, as investors balance softer recent labor market data with renewed geopolitical uncertainty and lingering inflation concerns. The central event for the dollar will be Tuesday’s CPI report in the US.
The headline CPI is expected to fall by 0.1% m/m in June, after rising by 0.5% in May, while annual inflation was previously at 4.2%. Core CPI is forecast to enhance by 0.3% m/m from 0.2%, while the annual base rate will remain unchanged at 2.9%.
On the other hand, Fed Chairman Warsh will testify on Tuesday and Wednesday, giving markets an opportunity to gauge how policymakers balance elevated inflation with signs of weaker employment. Comments from several Fed officials and the publication of the Beige Book will provide additional guidance.
Today’s US dollar price
The table below shows the current percentage change of the United States Dollar (USD) against the major listed currencies. The US dollar was strongest against the Swiss franc.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.12% | 0.07% | -0.42% | -0.08% | -0.17% | -0.14% | 0.21% | |
| EUR | -0.12% | -0.05% | -0.54% | -0.19% | -0.30% | -0.27% | 0.09% | |
| GBP | -0.07% | 0.05% | -0.50% | -0.13% | -0.25% | -0.23% | 0.13% | |
| JPY | 0.42% | 0.54% | 0.50% | 0.34% | 0.25% | 0.25% | 0.60% | |
| BOOR | 0.08% | 0.19% | 0.13% | -0.34% | -0.10% | -0.08% | 0.27% | |
| AUD | 0.17% | 0.30% | 0.25% | -0.25% | 0.10% | 0.02% | 0.35% | |
| NZD | 0.14% | 0.27% | 0.23% | -0.25% | 0.08% | -0.02% | 0.34% | |
| CHF | -0.21% | -0.09% | -0.13% | -0.60% | -0.27% | -0.35% | -0.34% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD falls near 1.1420, then retreats as the US dollar rebounds from the weekly low and ends the week with a loss of 0.19%. The pair will remain very sensitive to US CPI readings and Warsh’s comments, while the European calendar includes data on industrial production and final inflation.
GBP/USD is trading near 1.3400, with a weekly gain of around 0.34% after hitting a three-week high. The pound sterling (GBP) has a major domestic calendar ahead of it, with United Kingdom (UK) GDP, industrial output and industrial production due to be published on Thursday. UK GDP is expected to grow by 0.1% m/m in May, after contracting by 0.1%. Industrial production is forecast to enhance by 0.1%, while industrial production is forecast to decline by 0.1% after previously increasing by 0.4%.
The USD/JPY rate fell near 161.70 on Friday, but will end the week with a gain of 0.24%. The pair’s rate will remain influenced by the yield of US treasury bonds, Fed expectations and concerns about possible intervention by the Japanese authorities. A hotter-than-expected US CPI report could lift yields and revive upward pressure on USD/JPY. Milder inflation could extend the pair’s decline and provide further support for the Japanese yen.
AUD/USD is trading slightly higher near 0.6950, thanks to a softer, broader US dollar context and the recent strengthening of the Chinese yuan. However, the direction the Australian takes next week will depend largely on Chinese macroeconomic data and US inflation. Wednesday’s China GDP report is expected to show the economy grew 4.4% y/y in the second quarter, after slowing from 5%. Quarterly growth is forecast at 0.9%. Industrial production is expected to enhance by 4.7% and retail sales to decline by 0.1% y/y.
USD/CAD is falling near 1.4150 in anticipation of Wednesday’s Bank of Canada policy decision. The BoC is expected to leave its reference rate unchanged at 2.25%. The accompanying Monetary Policy Report, policy statement and press conference will be closely scrutinized for guidance on inflation, domestic demand and future changes in interest rates. A hawkish message may extend the decline of USD/CAD, while a cautious stance may limit the strength of the Canadian dollar.
West Texas Intermediate (WTI) Oil traded lower to near $71.60 a barrel as investors assess the risk of renewed supply disruptions amid tensions between the United States and Iran. Oil prices could become more volatile if diplomatic efforts continue to deteriorate or concerns about supply routes in the Middle East intensify. However, signs of weaker global demand, particularly from China, could limit gains.
Gold prices are falling near $4,102, losing value as the US dollar rebounds and investors prepare for the US inflation report. The precious metal remains supported by geopolitical uncertainty, although higher Treasury yields could create additional pressure.
Anticipating the economic outlook: voices on the horizon
Monday, July 13:
- Bowman Fed
- Waller Fed
- Schnabel ECB
- BoE pill
Tuesday, July 14:
- Warsh Fed
- Barr Fed
- Goolsbee Fed
- Chef Fed
- Bowman Fed
- Bailey from the BoE
Wednesday, July 15:
- Williams of the Fed
- Warsh, Fed chairman
- Nagel of the ECB
- Chef Fed
- Musalem Fed
Thursday, July 16:
- Logan from the Fed
- Schmid Fed
- Jefferson of the Fed
Friday, July 17:
This will be shaped by central bank meetings and upcoming data releases
The main event for monetary policy will be the Bank of Canada’s interest rate decision taken on Wednesday, July 15. The central bank is expected to leave its key interest rate unchanged at 2.25%.
The BoC will also release its monetary policy report and policy statement, followed by a press conference. The Fed, ECB, BoE, BoJ, RBA and RBNZ do not plan any decisions on interest rates.
