It’s another event-filled trading week, with the RBA and BOE decisions lined up.
And don’t forget the jobs reports from New Zealand, Canada, and the US!
Make sure you review which factors drove forex market price action last week, too.
Major Economic Events:
RBA rate statement (Aug. 3, 4:30 am GMT) – No actual interest rate changes are expected from the Australian central bank this week.
Some are even predicting that RBA policymakers might revert to a more cautious stance, given how the spread of the Delta variant has prompted a wave of lockdowns all over the country in the past month.
New Zealand quarterly jobs report (Aug. 3, 10:45 pm GMT) – A slight pickup in hiring is expected for Q2 2021, with the employment change reading slated to post a 0.7% gain after the previous period’s 0.6% uptick.
This might be enough to bring the jobless rate down from 4.7% to 4.4% for the quarter.
Stronger than expected results could spur a Kiwi rally, as this might keep the RBNZ on track towards tightening monetary policy ahead of its peers.
BOE Super Thursday (Aug. 5, 11:00 am GMT) – Brace yourselves for a trifecta of major central bank events in the U.K. this Thursday!Not only will the BOE announce its policy decision, it will also be releasing the minutes of its meeting and the quarterly Monetary Policy Report.
BOE policymakers are likely to keep rates and asset purchases unchanged for the time being, although some expect a lone hawk (Saunders) to vote again for an early end to QE.
Keep in mind that the vaccination efforts are making a lot of progress, effectively slowing the spread of the Delta variant in the U.K. recently. Many also expect the central bank to upgrade its inflation forecast, likely fueling tightening hopes in the near future.
Canada’s jobs report (Aug. 6, 12:30 pm GMT) – After a pretty strong 230.7K rebound in hiring last June, the Canadian jobs market could post a slower growth of 147.5K for July.
Still, this should be able to bring the jobless rate from 7.8% all the way down to 7.3% for the month.
U.S. non-farm payrolls report (Aug. 6, 12:30 pm GMT) – Uncle Sam will also be printing its latest employment numbers on Friday, likely showing a slighter faster increase of 895K versus the earlier 850K figure.The unemployment rate is projected to have dipped from 5.9% to 5.7% in July while the average hourly earnings figure could hold steady at 0.3%.
Keep in mind that the Fed is keeping a close eye on the labor market, citing that they are waiting for more evidence of a strong jobs recovery before adjusting policy.
Forex Setup of the Week: GBP/USD
Still feeling dollar bullish this week? Here’s a long-term setup that’s worth keeping tabs on!
Cable is in the middle of a retest of the broken rising trend line on the daily time frame, probably gathering more selling energy before resuming the reversal.To top it off, a bearish divergence is showing up, as price made lower highs while Stochastic had higher highs. Once the oscillator turns south from the overbought region, pound bears could gain the upper hand!
Just be careful since the 100 SMA is still above the 200 SMA to hint that the path of least resistance is to the upside or that there’s a chance for the climb to resume.
Of course this could all boil down to the BOE events this week, as a more hawkish tone from the central bank could lead pound bulls to charge.
Also, don’t forget to watch out for the leading U.S. jobs indicators that could set the tone for dollar price action even ahead of the actual NFP release!