Interest rate speculations was the name of the game for dollar bulls and bears last week. Which catalysts would move the dollar around this week?
Flash PMIs (Jul 24, 2:45 pm GMT)
In case you haven’t checked your forex calendars, know that Markit will publish their flash manufacturing and services PMIs for the month of July.
Last month’s manufacturing PMI clocked in at 50.1 in June, lower than May’s 50.5 reading. Heck, it marked the lowest since September 2009! A closer look told us that weak production growth and staff hiring dragged the index lower.
Meanwhile, the slowest service output since March 2016 weighed on the services PMI from 50.9 in May to 50.7 in June.
At the time, the surprising (and dramatic) misses in both the manufacturing and services PMIs dragged the already weak dollar to new intraweek lows. Yikes!
This week analysts expect to see the manufacturing PMI come in at 50.9 while the services PMI is seen to improve to 50.6.
Improvements in the closely watched indices could take some pressure off of the dollar, so don’t even think of missing the event!
Advance quarterly GDP (Jul 26, 1:30 pm GMT)
The last advance quarterly GDP showed Uncle Sam growing by 3.2% in Q1 2019, which wasn’t as bad as many had projected. This is probably why the dollar popped higher, at least initially.
Traders soon noticed the tepid price growth, however. This got some traders worried, enough to cancel out most of the dollar’s post-release spike.
This week market geeks see the first GDP reading at 1.8%, much lower than the final reading of 3.1% in the previous quarter and would mark the weakest reading since Q1 2017.
Notably weak growth data could fuel more aggressive rate cut speculations for the Fed. If you recall, a bunch of them gave speeches last week and all but guaranteed at least one interest rate cut this year.
Missed last week’s price action? Read USD’s price recap for July 15 – 19!