Dollar opens the week higher and maintains last week's gain. Markets increased bets on Fed hike this year after chair Janet Yellen said that "the case for an increase in the federal-funds rate has strengthened in recent months." The greenback will now look into a string of important data for guidance. Those include personal income and spending on Monday, consumer confidence on Tuesday; ADP employment on Wednesday, ISM manufacturing on Thursday. And finally, the highly anticipated non-farm payroll report on Friday. The greenback will likely have a volatility week ahead.
The strength in dollar was partly due to revived speculations of a September hike. Fed fund futures are pricing in 33% for that at the moment. However, it should be noted that there is significant chance Fed will keep powder dry before presidential election in November. Also, two fed officials talked down the chance of two hikes this year. St. Louis Fed president James Bullard said he's "agnostic" about timing on the rate hike, And, "if we had a lot of good news and we got into the September meeting and other people wanted to go, I could support that—but again I'm talking about one increase and no planned increases after that." Atlanta Fed president Dennis Lockhart said "the calendar would allow that, we have three more meetings". And, Lockhart won't take the position of predicting two hikes.
In Japan, BoJ Haruhiko Kuroda reiterated that "the Bank of Japan will continue to carefully examine risks and take additional easing measures without hesitation." He noted that the central bank's QQE program and negative interests are "extremely powerful policy scheme" and they "will act decisively as we move on". Yen is one of the weakest major currencies this month on talk the BoJ could expand stimulus in September meeting after another month of weak inflation in July.
Here are some highlights for the week ahead:
- Monday: US personal income and spending
- Tuesday: Japan household spending, unemployment rate, retail sales; Australia building approvals; German CPI; UK mortgage approvals; Canada current account, IPPI and RMPI; US consumer confidence, S&P Case Shiller house price
- Wednesday: Japan housing starts; Swiss UBS consumption indicator; German retail sales, unemployment; Eurozone CPI, unemployment; US ADP employment, Chicago PMI, pending home sales; Canada GDP
- Thursday: New Zealand terms of trade; Australia retail sales; China PMIs; Swiss retail sales; UK PMI manufacturing; US jobless claims, non-farm productivity, ISM manufacturing, construction spending
- Friday: Japan monetary base, consumer confidence; UK construction PMI; Eurozone PPI; Canada trade balance; US non-farm payroll, trade balance, factory orders