It’s gonna be a busy one for the dollar!
Uncle Sam is gearing up for the FOMC statement, advanced GDP release, and core PCE price index.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
Australian quarterly CPI (July 28, 1:30 am GMT) – A slightly faster pickup in price pressures is eyed, with the headline CPI slated to advance from 0.5% to 0.6% and the trimmed mean CPI to climb from 0.3% to 0.5% in Q2 2021.
However, this might not do much to lift the Aussie’s spirits, as the economy’s performance is bogged down by another set of lockdowns to curb the spread of the Delta variant.
Canadian CPI (July 28, 12:30 pm GMT) – The Great White North will also be printing its inflation figures midweek, possibly showing mixed results.The headline reading is projected to have dipped from 0.5% to 0.4% while the common CPI likely ticked higher from 1.8% to 1.9%.
The trimmed CPI probably stayed unchanged at 2.7% while the median CPI might have climbed from 2.4% to 2.5%.
FOMC statement (July 28, 6:00 pm GMT) – No actual interest rate changes are expected from the U.S. central bank, with Fed head Powell still likely to downplay the pickup in inflation.
Still, the pressure is mounting for policymakers to start tapering their asset purchase program since the U.S. economy has been recovering already. Any indication that the Fed is closer to scaling back their stimulus efforts could be bullish for the dollar.
U.S. advanced GDP (July 29, 12:30 pm GMT) – Stronger growth figures are eyed for the previous quarter, with the U.S. economy likely growing by 8.5% in Q2.Keep in mind that more businesses have reopened in the past few months, likely spurring stronger investment and consumer activity.
An even higher than expected read could reinforce Fed tightening hopes while a downside surprise could cast doubts on seeing tapering moves anytime soon.
U.S. core PCE price index (July 30, 12:30 pm GMT) – Another slight pickup in inflation is eyed, as the reading probably increased from 0.5% to 0.6% for June.
Note that this is the Fed’s preferred inflation measure, so it’s kind of a big deal!
Forex Setup of the Week: AUD/USD
If you’re feeling dollar bullish this week, then this setup could be worth keeping on your radar!AUD/USD is moving below a descending trend line that seems to be holding as resistance again. Price is moving sideways, suggesting that traders are holding out for catalysts.
A break below the current consolidation above the .7360 area could confirm that the downtrend is resuming, possibly taking AUD/USD to the bearish targets marked by the Fibonacci extension tool.
The 50% level might hold as strong support near the swing low and .7300 major psychological handle. Even stronger bearish momentum could take the pair down to the full extension at .7200.
Technical indicators support the idea of a selloff, as the 100 SMA is safely below the 200 SMA while Stochastic is heading south.
I’d still keep an eye out for all the top-tier economic events in the U.S. and Australia to see if this pair could go further down!