Comments from global central Bank officials will continue to be watched very closely during the week ahead as markets look for further evidence on future changes in interest rates.  

All the key central banks are at a critical juncture regarding policy with uncertainty whether there will be further increases in US interest rates and when the ECB and Bank of England start to raise rates. Changes in yields will continue to dominate currency moves.

There will start to be a decline in liquidity on seasonal grounds due to the European and US summer holiday season and this increases the risk of erratic currency moves. Nevertheless, the most likely outcome is little overall change across major pairs with the dollar unable to gain further significant support.

US

There are several significant US economic data releases during the week with durable goods orders on Monday, consumer confidence on Tuesday and final Q1 GDP data on Thursday. Growth-orientated data is likely to have relatively limited impact unless somewhat extreme.

Trends in inflation are likely to be much more important for expectations surrounding Federal Reserve policy and Friday’s data on prices will be important.

Fed Chair Yellen is due to deliver a lecture on Tuesday in London with her comments watched closely.  

UK

Any further comments from Bank of England officials will be an important focus, after very mixed comments during the past week.

There are very clear differences of opinion within the Monetary Policy Committee (MPC) over whether there should be an increase in interest rates relatively quickly or whether the bank should wait longer. There will be a further strong debate ahead of the next MPC meeting in early August. Sterling will gain support if a rate increase appears more likely.

The Bank of England will release its latest Financial Stability Report on Tuesday and Governor Carney is likely to hold a press conference.

The UK current account deficit data will be released on Friday and could have an important impact on medium-term expectations surrounding Sterling’s value.

Political developments will continue to have an important impact on Sterling sentiment, especially as the government has still not secured a deal with the Democratic Unionist Party (DUP).  Uncertainty will continue to undermine Sterling during the week, like it did last year.

Euro-zone

The latest German and Eurozone inflation data will be released on Thursday and Friday respectively. Subdued inflation data would encourage the ECB to maintain a very loose monetary policy.

Comments from key ECB officials will also be important as they hold their annual banking symposium.

The most likely outcome is that there will be no major policy hints, but any hints of tightening would provide a big Euro boost.

International

Oil prices will continue to grab headlines after a slide to 10-month lows in the latest week.

China will release its latest PMI data which could have a significant impact if the data suggests that China’s economy is weakening.

Global equity markets will be an important focus after some signs of vulnerability. If equities are subjected to further selling pressure, there will tend to be support for the Japanese yen.

Forecasts

Proposed reading:

• More recent news
• 2017 Economic Calendar
• Today’s Foreign Exchange Rates

Information expressed in this article and on MoneyTransferComparison.com as a whole does not constitute as financial advice. If you decide to make any actions based on the information you read, we shall not be held responsible.