Next week is shaping up to be a critical one for major currency pairs. Investors are coming back from the US Independence Day holiday and are sifting through somewhat disappointing US labor market data. The upcoming release of the minutes from the last Federal Open Market Committee (FOMC) meeting, along with new unemployment insurance claims, will really put the US dollar (USD) to the test.
Currently, the US dollar index (DXY) might dip to the 100.90 range, with expectations of closing the week down by about 0.50%. The focus for the dollar will be on several relatively light but significant data points from the US. On Monday, the final S&P Global Services PMI and ISM Services PMI will be released. But it’s Tuesday’s trade balance and Wednesday’s FOMC minutes that could be particularly crucial. Those minutes from the Fed’s June 1 meeting, under Chairman Kevin Warsh, might shed some light on whether policymakers will stick with their restrictive policy.
USD price today
The following table shows how the US dollar (USD) is performing against major currencies today. The USD is currently showing strength against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.06% | 0.16% | 0.15% | -0.17% | -0.14% | 0.04% | |
| EUR | 0.04% | -0.03% | 0.20% | 0.18% | -0.16% | -0.13% | 0.07% | |
| GBP | 0.06% | 0.03% | 0.22% | 0.20% | -0.16% | -0.09% | 0.10% | |
| JPY | -0.16% | -0.20% | -0.22% | -0.01% | -0.37% | -0.33% | -0.12% | |
| CAD | -0.15% | -0.18% | -0.20% | 0.00% | -0.37% | -0.30% | -0.10% | |
| AUD | 0.17% | 0.16% | 0.16% | 0.37% | 0.37% | 0.07% | 0.25% | |
| NZD | 0.14% | 0.13% | 0.09% | 0.33% | 0.30% | -0.07% | 0.19% | |
| CHF | -0.04% | -0.07% | -0.10% | 0.12% | 0.10% | -0.25% | -0.19% |
The heat map represents percentage changes between major currencies. The base currency is shown in the left column and the corresponding quote currency is on the top row. For instance, if you select USD from the left and look along the row for Japanese Yen, the percentage change in the box reflects USD (base)/JPY (estimate).
As for EUR/USD, it’s trending upwards at approximately the 1.1440 mark. This seems likely to be influenced by the weaker US labor figures compared to the European Central Bank’s (ECB) cautious position. Data regarding trade and industry from Germany and France will also be significant in determining if economic recovery can persist.
On the other hand, GBP/USD has risen over 1% this week, trading at around 1.3350. It appears that this pair is sensitive to the broader trends of the USD. If the FOMC minutes highlight concerns about the labor market, the pair might find some support.
In the case of USD/JPY, it’s hovering around 161.40 after peaking at a 40-year high of 162.84 earlier. The Japanese yen could face challenges if the US dollar continues its upward march. However, if the market starts to view the Fed as potentially less restrictive, a weaker US economic picture might cap any gains for the yen. There’s also the possibility of intervention if USD/JPY remains close to historic highs.
AUD/USD is sitting around the 0.6940 mark as we watch how sentiment related to China develops along with broader USD trends. Recently, Australia has benefited from better PMIs along with the resilience of services in China.
Turning to West Texas Intermediate (WTI) crude oil, it’s around $68.80 per barrel. Oil prices will likely react to supply forecasts, geopolitical tensions, as well as the upcoming OPEC+ meeting. The recent drop in oil prices back to pre-war levels has eased some inflation fears, but any change in supply expectations could quickly stir volatility in energy markets.
Gold (XAU/USD) is climbing to around the $4,175 level. It may continue gaining if US yields dip and the minutes from the Fed reinforce the idea that they might not keep a restrictive stance for too long. But, if the USD rebounds strongly, it could impede the precious metal’s rise.
Predicting the economic outlook: Voices of the future
Monday, July 6th
- Waller Fed Director
- Mr. Mann of the Bank of England
- ECB’s Schnabel
- ECB President Lagarde
- ECB Lane
Tuesday, July 7th
Wednesday, July 8th
Thursday, July 9th
- Breeden of BOE
- ECB President Lagarde
- ECB Cipollone
Friday, July 10th
- ECB President Lagarde
- ECB’s Vujicic
Central bank meetings and policy decisions
Next week’s key policy decisions will include the RBNZ Monetary Policy Review and OCR release scheduled for Wednesday, July 8, with an online media conference planned for later that same day. The minutes from the FOMC meeting on June 17 will come out on Wednesday, while a report from the ECB’s June policy meeting should be available on Thursday. The central bank’s financial stability report and the FPC record will be published on Tuesday. There are no major interest rate changes from the Fed, ECB, BOE, BOJ, RBA, or BoC expected this week.
