As we begin the final full week of July, foreign exchange markets continue to walk a tightrope between data-driven moves and broader geopolitical undercurrents. While the economic calendar may appear lighter compared to earlier this month, the week ahead presents a few important data releases and risk events that could trigger significant volatility across major currency pairs. Read on for more foreign exchange insights…
GBP: Awaiting Friday’s Retail Sales Amid a Quiet Week
The UK enters this week with minimal domestic data until Friday’s Retail Sales release, which will provide fresh insight into consumer resilience. As the Labour government continues its agenda without any significant fiscal developments scheduled, market attention will turn toward external influences.
- Friday: UK Retail Sales (June). A strong reading could boost GBP by signalling ongoing consumer strength. A weak figure, however, could pressure the Bank of England to consider policy easing sooner than markets expect.
- BoE commentary: Any unscheduled remarks from policymakers may further steer expectations around future interest rate moves.
📉 GBP Impact: Without strong domestic catalysts until Friday, GBP will likely respond to shifts in USD and EUR momentum earlier in the week. If the US or Eurozone data surprises, particularly PMI releases, sterling may experience increased volatility.
USD: PMIs, Trade Talks, and Sentiment Swings
The US dollar faces a more active calendar. Key PMI releases and the EU–China summit headline the agenda, with Monday’s Consumer Credit offering an early glimpse into household financial stress or strength.
- Monday: US Consumer Credit (May), a rising figure may suggest confident consumers; a sharp drop could stir concerns.
- Thursday: US Manufacturing and Services PMIs – crucial for gauging the health of the US economy.
- Geopolitics: The EU–China summit could generate trade-related headlines. With the Trump administration closely watched, any escalation could support safe-haven USD demand.
📈 USD Impact: The dollar remains the primary global safe-haven. A poor global sentiment or any geopolitical flare-up could send USD higher, while upbeat global PMIs might weaken the greenback slightly.
EUR: ECB Statement and Economic Data Under the Microscope
It’s a relatively big week for the euro. Thursday, the spotlight turns to the ECB monetary policy decision and Lagarde’s press conference.
- Thursday: While no rate change is expected, the tone of the ECB and Lagarde’s messaging will be vital. Markets will dissect every word for hints on further rate cuts or any deviation from a wait-and-see strategy.
- Thursday also includes: Flash Manufacturing and Services PMIs across Germany, France, and the wider Eurozone.
📊 EUR Impact: The euro could come under pressure if data disappoints and the ECB maintains a cautious tone. On the other hand, any sign of optimism – especially around growth or delayed rate cuts – could lift the currency modestly. The PMIs will play a role in either validating or undermining the ECB’s narrative.
Other Major Currencies and Global Themes
JPY: No major Japanese releases, leaving JPY to track risk sentiment. Safe-haven flows may increase if global tensions rise.
AUD: RBA minutes (Tuesday) could provide clues about future rate direction. Hawkish sentiment could buoy the Aussie.
CAD: No major data releases. CAD will track oil prices and US data.
CNY: No major rate changes this week; focus remains on potential fiscal stimulus and any fallout or cooperation from the EU–China summit.
Global Watchlist
- EU–China Summit: Outcomes could impact trade-sensitive currencies like EUR, AUD, and CNY.
- Middle East developments: Watch for oil-related moves affecting CAD, NOK.
- Trump Administration: Still a key market influence. Any comments or trade shifts will likely influence safe-haven demand.
FX Strategy Snapshot
- EUR buyers: Retail and PMI weakness + dovish ECB could offer an opportunity. Consider locking in if you’re paying in euros.
- USD receivables: A mixed US outlook and political uncertainty favours a staggered approach, blending spot and forward tools.
Did You Know?
The euro banknotes feature fictitious architectural designs from seven distinct European periods – deliberately avoiding real landmarks to represent unity across EU nations.
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