Following NFP on Friday, the week ahead is relatively light in terms of economic data from Europe, the United States, and Canada. However, it is an important week for the AUD and NZD pairs, with critical fundamental data coming out of Australia and New Zealand respectively.
NFP Market Reaction to Dominate Today’s Price Action
With no important economic data today, the market is expected to continue its reaction to last Friday’s NFP report. As a reminder, the NFP blew out the expectations, as the Unemployment rate fell.
After initially having a mixed reaction, the USD strengthened across the board, contrasting with the U.S. equities direction. Up until the NFP report, the USD had an indirect correlation with the stock market.
Regardless of what the ISM or ADP showed, the stock market moved higher and the USD lower.
That correlation changed after the NFP report, and today’s focus is to see if the change persists or it was just a temporary disconnection.
RBNZ Monetary Policy to Move the NZD Pairs
The Reserve Bank of New Zealand (RBNZ) delivers its monetary policy report on Wednesday. The NZDUSD is on the watch as it rose significantly from its March lows, and the RBNZ cannot be happy about it. In times of crisis, the ability of a central bank to print its way out of it via a lower currency is one of the easiest things to do – something that the RBNZ has not achieved so far.
Australian Employment Change Out Next Thursday
The Australian employment data the next day is key for the AUD pairs. Just like the Kiwi dollar, the Aussie dollar strengthened significantly in the second quarter of the year.
Higher commodity prices and a recovering Chinese economy helped the Aussie dollar, but the economic data still has not improved across the board. The employment report next Thursday offers a better picture of how the Australian economy has handled the coronavirus crisis in July.
GBP Preliminary GDP and the United States CPI
Those interested in the major pairs may look towards the US CPI, or Consumer Price Index (i.e., inflation) data. Which is forecasted to decline MoM. Despite gold and silver rally suggesting higher inflation ahead, there is little to no evidence of such a thing happening anytime soon.
Finally, the GBP traders better keep an eye on the U.K.’s Preliminary GDP. Wednesday’s data is supposed to show a more than 20% contraction for the UK GDP, and any deviation from it will create wild swings on the GBP pairs.