NFP’s and Manufacturing Data Could Dictate Risk Sentiment and Dollar Direction

The FOMC meeting is the marquee event risk on the calendar but could take a back seat to other indicators as the central bank is expected to remain on hold. The emergency budget report from the U.K. coalition government may steal the headlines and could dictate future pound price action. German IFO, Canadian CPI and U.S. Durable Goods are other potentially market moving releases on the economic docket.

• German Unemployment Change (JUN) – June 30 – 07:55 GMT
The number of unemployed in Europe’s largest economy is forecasted to have fallen for an eleventh straight month. German jobless ranks are expected to have declined by 28,000 in June adding to the 45,000 the month prior. An improving labor market could help ease concerns over the debt issues in the region as it is a sign that domestic growth is improving. The Euro has consolidated recent gains and improving fundamentals could be a catalyst to push the single currency higher.

• Canadian GDP (APR) – June 30 – 12:30 GMT
Growth in Canada is forecasted to have improved by 0.1% in April slowing from 0.6% the month prior. A disappointing retail sales figure for the period has already started to dim expectations for further tightening from the BoC which could be amplified by a flat or negative GDP reading. Domestic fundamentals may lose their impact on price action as Governor Carney has stated that global factors will need to taken into account in determining future monetary policy.

• U.K. PMI Manufacturing (JUN) – July 1– 08:30 GMT
The pace of expansion in the U.K. manufacturing sector is forecasted to have slowed according to the Purchaser’s manger’s index. Economists are looking for the gauge to slip to 57.5 from 58.0 which shouldn’t raise eyebrows as the sector has grown for the eight straight months. Indeed, the prior month’s reading was the highest in over 15 years as a weak pound has made British exports attractive. Signs that activity is sustaining will add to the case that the country could maintain growth despite the proposed cuts in government spending building upon current bullish pound sentiment.

• U.S. ISM Manufacturing (JUN) – July 1 --14:00 GMT
The latest revision of first quarter GDP for the U.S> showed a 16% increase in exports as demand from abroad continues to spur activity and growth. The manufacturing sector continues to be the key to the U.S. recovery and the ISM gauge is the most important reading for it. Therefore, the expected weakness to 59.0 from 59.7 could add to growing concerns over domestic and in turn global growth which could ironically benefit the dollar which continues to be a safe haven for investors. Conversely, an improvement would signal a sustainable recovery as the sector may be able to bridge the gap between government spending and a return of consumer consumption.

• U.S. Non-Farm Payrolls (JUN) -- July 02 – 12:30 GMT
The biggest key for a sustainable U.S. recovery is the labor market and if projections hold true investors could be disappointed. Economists are forecasting a job loss of over 100,000 which would be the first time the economy gave back jobs since last December. However, just as last month’s gains were inflated by the census so is this month’s losses as private payrolls are expected to have gained by 113,000, which is more relevant for the longer –term picture. If markets look past the headline figure then we could see a surge in risk appetite which could weigh on the greenback and yen while benefitting the Euro and commodity dollars.

See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

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