As we close another turbulent month and quarter, currency markets end June on notable highs. GBP/USD finished impressively above 1.37, GBP/AED surpassed the key level of 5.00, and EUR/USD climbed comfortably above 1.17. For those purchasing U.S. Dollars, June was a particularly advantageous month, and momentum in this trade appears robust enough to continue in the short term.
Looking ahead, July is shaping up to be another month filled with significant volatility triggers. Before we delve into this week’s immediate economic data releases, it’s important to highlight several key dates that currency traders and businesses should mark on their calendars:
Key Dates for July:
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9th July: Deadline of the 90-day pause for reciprocal tariffs between the U.S. and its trading partners.
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15th July: U.S. Consumer Price Index (CPI) data release, critical for Fed policy direction.
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30th July: U.S. Treasury Quarterly refunding announcement, closely watched for fiscal policy clues.
Of these, 9th July stands out as a particularly pivotal day. Any announcements regarding the extension or removal of tariffs leading up to this deadline could significantly alter risk sentiment and U.S. Dollar volatility. Traders should stay alert to headline risk as this date approaches.
Economic Data Releases This Week:
This upcoming week brings plenty of data-driven volatility, setting the tone for July’s market activity.
Monday: UK GDP and Housing Data, German Inflation
The week begins strongly with the UK releasing GDP growth figures. Expectations are for a quarterly rise of 0.7%, although annual data may still indicate a slight contraction of -0.2%. Positive quarterly growth could bolster Sterling early in the week, offering some reassurance about the UK’s economic resilience.
UK mortgage approvals are also scheduled on Monday, with numbers expected to improve, reflecting lower borrowing costs after recent rate reductions. Strengthening housing market data often boosts sentiment toward Sterling, particularly if it signals broader economic confidence.
Later, we receive preliminary German inflation figures, projected to show rising price pressures. A higher inflation reading could support the Euro, suggesting the ECB’s recent policy measures are effectively stabilising the Eurozone economy.
Tuesday (1st July): Manufacturing PMIs, Eurozone Inflation, Fed Speech
On Tuesday, manufacturing PMI data from both the Eurozone and the UK will be closely watched, with both regions expected to post stronger figures compared to the previous month. Robust manufacturing numbers usually enhance economic optimism, potentially supporting the Euro and Pound.
Shortly after, the Eurozone releases flash inflation data, expected to hit the ECB’s target of 2%. Achieving this key level may reaffirm market confidence in the Euro, reflecting the ECB’s recent rate strategy as successful.
In the afternoon, the U.S. manufacturing PMI is expected to remain steady, providing little directional momentum for the Dollar. However, traders will keenly anticipate Fed Chair Jerome Powell’s speech for clues on the Fed’s future policy path. Any signals regarding interest rates or inflation concerns could swiftly impact USD pairs.
Wednesday: U.S. ADP Employment Data
Wednesday brings U.S. ADP employment data, forecast to show an increase of 80,000 jobs. As a widely regarded precursor to Non-Farm Payrolls (NFP), a stronger employment report could provide short-term support for the Dollar, particularly if markets interpret the data as evidence of ongoing labour market resilience.
Thursday: Services PMIs and U.S. Jobless Claims
Thursday is filled with influential data releases. Service sector PMIs from Europe, the UK, and the U.S. are scheduled. European data is anticipated unchanged, UK data stronger, and U.S. data slightly weaker. These figures could lend further strength to Sterling and potentially weigh on the Dollar.
Additionally, the U.S. releases weekly jobless claims and factory orders. These figures will offer a snapshot of short-term economic health and could trigger volatility, especially if data significantly deviates from expectations.
Friday: U.S. Independence Day Holiday
Friday marks the U.S. Independence Day holiday, meaning U.S. markets will be closed. Importantly, this means no Non-Farm Payrolls data release this week. With the absence of significant U.S. data, Friday might be quieter than usual, providing a brief respite from recent volatility.
Final Thoughts:
As we enter July, currency markets remain highly responsive to economic data and geopolitical headlines. Traders should remain vigilant, carefully tracking these key economic indicators and tariff developments to effectively navigate potential volatility.
As always, if you have any questions or need assistance managing your FX strategies in these turbulent markets, please don’t hesitate to reach out—I’m here to help.