Forex News: After July 6’s announcement of poor NFP figures, the USD has continuously gained and is currently being considered as a currency that is safe as of the moment. However, this does not exclude the currency from all the risks that can occur within the ongoing week.
According to expert analysis, there are two main types or categories of risks that can be experienced by the USD. Among the risks are the following:
- The risk-off and risk-on mechanism has direct effects to the USD. The current state of USD, being a safe haven currency, is beneficial for the currency. Any small bit of bad news about China’s Yuan or Euro tends to propel the performance of the USD and the Japanese Yen. During times of risk on, the USD has the tendency to gain with the Japanese Yen, and the Japanese Yen, tends to gain on the USD.
- Federal Reserve Bank decisions or even the slightest clues on what will transpire on the next meeting of the bank can make or break the USD. Their decisions in relation with the interest rates will gravely affect not just the market pricing but also the fate of the USD as an international currency.
The following are the risks faced and currently being faced by the USD as a currency within this week:
July 8/9: The inflation being experienced by China is slated to be at 6.4 percent. This implies China seems to be prepared for further measures for easing the current situation and to stimulate the monetary conditions. On the other hand, in the United States, FOMC has given some hints about the June meeting. It seems convinced that the QE might be effective enough.
July 10: China’s balance in trade somewhat announced further potentials in its economy. In the previous months, an increase in the demand for Chinese products was noted. The recent release in loan data and information only proves to show that Yuan is the currency to watch out for. It might just be the next reserve currency.
July 11: Data for trade balance for the month of May came out. More pieces of information for import and export components are revealed. In addition, historical lows in oil inventories have been found to be at 1.43 percent.
July 12: In the United States, data on jobless claims have consistently increased. This trend is expected to continue with the current trend. This puts the damper on a level of risk that it has been consistently experiencing. According to the FOMC reports, inflation, as a whole is subdued and this leaves the committee to do some QE. The prices of the import in territories tagged as negative territories turns out to be specific strength for the USD.
Meanwhile, in China, second quarter Gross Domestic Product is expected to be reported at 7.9 percent, slightly lower than the 8.1 percent established during the first quarter. This is considered to be a key press release from China in its attempt to rise to significance in the global economy.
July 13: In the US, the producer price index (PPI) helps confirm that the inflation is held down to give way to Fed’s operation.
Taking it one week at a time makes it easier to analyze the elements at hand. Will the trends persist or will they be reversed in the coming weeks? Studying key events will definitely help in answering this question.