Fresh after Governor Mark Carney uncovered the Bank of England’s new dual unemployment-inflation policy mandate, investors will study Britain’s latest consumer price inflation and unemployment data, whilst also digesting minutes from the BoE’s earlier policy meeting. Traders may decide to extend the pound’s rally to new highs if UK data continues to beat market expectations.However, topping the economic calendar could be preliminary second quarter GDP data from the euro zone that is expected to show the region finally exiting a recession which started back in 2011.
Intervention talk has been offset by solid retail sales data in Switzerland which is keeping the Swiss franc busy, with markets also expecting key consumer spending data from the US economy. Analysts are expecting to see another month of cautious consumer spending growth which is a result that could keep the US dollar exposed to further losses by damping the Federal Reserve’s “taper-by-September” story.
Sterling
Just days after Governor Mark Carney uncovered the Bank of England’s new dual unemployment-inflation mandate, investors will study Britain’s latest consumer price inflation and unemployment data. Numbers that may feed expectations that the BoE may have to consider tighter policy sooner than markets had originally priced in could lengthen the pound’s rally. The BoE will also publish its earlier meeting minutes.
US dollar
With US dollar weakness starting to look a little overstretched on a technical basis, investors may use upcoming US retail sales data as an early opportunity to bring the US currency back closer to trend. However, analysts are expecting to see another month of cautious consumer spending growth which is a result that could also keep the US dollar exposed to further losses by damping the markets “taper-by-September” story. The US dollar suffered consecutive daily losses, dropping to June 19 lows on a trade-weighted basis as investors continued to pare bets that the Federal Reserve would announce a stimulus taper in September.
Euro
On August 2, the single currency reached six-month highs on a trade-weighted basis but that uptrend is starting to slip ahead of critical preliminary second quarter euro zone GDP data. Markets are expecting a positive number to put an end to the region’s recession which has lasted since 2011. A zero or negative reading, extending that period by another quarter, could potentially cause a euro collapse if traders presume there will be a policy response from central bankers.