During the first week of June, disappointing US job report slashed expectations concerning a June rate-hike as May month NFP dropped to nearly five year low and previous readings were also downwardly revised. With an unexpectedly pessimistic NFP, market players ignored the least Unemployment-rate since late 2007 and dragged the US Dollar Index (I.USDX) towards marking its first negative weekly closing in previous five. This heavy drawdown of the USD helped rest of the major currencies, except the GBP which largely declined due to polls showing higher chances of Brexit. The EUR took advantage of fewer chances favoring further monetary policy divergence between the US and the rest of the major central bankers while the JPY registered strong up-move as growing uncertainty across the globe favored its safe-haven demand. The AUD, NZD and CHF also strengthened even with not-so-good economics while gains of Canadian Dollar remained under check after the Crude prices noted down its first weekly decline in prior four weeks as successful OPEC meeting, without any clashes between the major participants, signaled that the global oil producers are more inclined towards output hike.
Moving on, this week's economic calendar, unlike the last week, has fewer economics scheduled for publish, which in-turn indicate less volatile market-moves. However, Monday's speech by the US Fed Chair, the final public appearance by her ahead of the 14-15 June FOMC meeting, together with Friday's Prelim UoM Consumer Sentiment, would be important for the USD traders to watch. Further, monetary policy meetings of the RBA and the RBNZ, coupled with Final reading of Q1 2016 Japanese GDP and Chinese Inflation numbers, are likely additional data-points/events that could help provide intermediate trades to market participants.
Yellen's Speech Will Be Crucial For The USD
Although Friday's pessimistic job details threw cold water on prospects concerning USD strength based on policy divergence between the Fed and rest of major economies, a dip in Unemployment-rate might cause the US Federal Reserve Chair, Janet Yellen, to try soothing a pain of greenback's plunge during her speech on Monday. Moreover, preliminary reading of UoM Consumer Sentiment could also offer details to base greenback trades on.
On early Monday, one of the top Fed official said that the recent dip in NFP might not shun the chances of Fed's rate-hike in near-future; though, he also said that the same could trigger a pause for policy tightening soon.
As recently published labor market numbers shunned chances for the Fed Chair to maintain her previously stated hawkish statements, the USD could extend its downside. However, given the Fed Chair shares the same view as one of her colleagues mentioned, the greenback might witness short-covering rally. Though, the same could not last for long unless the consumer sentiment gauge, which is expected to mark 94.1 against 94.7 prior, prints highly optimistic number.
Japanese GDP & UK Manufacturing Production Are For JPY & GBP Traders To Follow
While a sudden change in market sentiment, mainly due to shift in US job details and polls governing Brexit ahead of June 23 EU referendum, might continue favoring the safe-havens like JPY, Wednesday's final reading of Q1 2016 Japanese GDP and the monthly reading of Manufacturing Production would be important for the JPY and GBP traders respectively.
The Japanese PM, during late-May, proved right the market speculations of a delay in pre-planned April 2017 sales-tax hike till 2019, which coupled with the renewed risk-averse sentiment, triggered the JPY's recent rally. However, economic data-points from the Japan haven't flashed any significant improvement, which in-turn forces the JPY traders to observe the final reading of Q1 2016 GDP.While market consensus favor a 0.5% number against 0.4% initial forecast, a weaker print may favor the need of further monetary stimulus by the Bank of Japan and can cause JPY drop; though, broader safe-haven buying could restrict drastic downsides of the currency.
With EU referendum date coming closer, the polls governing Brexit have become even more important for the EUR and GBP traders. While there are no important updates from the EU, the UK Manufacturing Production will be the only detail, together with Brexit polls, to govern the GBP moves. As the UK Manufacturing production is likely registering the same 0.1% growth rate, an upbeat number, together with sudden change in polls favoring the Bremain, could strengthen the already weaker GBP.
RBA, RBNZ And Chinese Inflation Numbers Sum-up The Calendar
In addition to the aforementioned details, monetary policy meetings of the Reserve Bank of Australia (RBA) and Reserve Bank of New-Zealand (RBNZ), together with monthly release of Chinese CPI and PPI, are some other events that would sum-up this week's economic calendar.
After the Australian central banker cut down its cash-rate to the record low in May, there were no headline releases that could further push the RBA towards another rate-cut, indicating Tuesday's monetary policy meeting to remain less active. However, a dovish statement from the monetary policy authority, due to again erupting negative signals from China, its largest trading partner, might trigger renewed downside of the AUD.
Unlike the RBA, New-Zealand central banker, RBNZ, is expected to cut its benchmark interest-rate by 0.25% to 2.00% at its late-Wednesday meeting. Moreover, quarterly release of central bank's monetary policy statement is also scheduled for publish during the same time. In addition to the rate-cut, which could pare the NZD's recent gains, a dovish economic outlook and signals for further monetary easing in quarterly statement can provide additional weakness to the New-Zealand Dollar.
Following another round of pessimistic headline PMIs, monthly releases of China's CPI and PPI, up for Thursday, would be important for commodity currencies, like AUD, NZD and CAD. While CPI is expected to maintain its 2.3% mark and the PPI is also likely to improve a bit to -3.1% from -3.4% prior, a surprise drop in headline inflation figures can be detrimental for the commodity and commodity currencies.