FX Weekly: Trive’s Week Ahead Views
This week focus lies on the US ISM Services PMI print, the Bank of England Rate decision, the Canadian and NZ jobs reports, as well as China Trade data.
Monday
Markets open the week digesting the outcome of the OPEC+ meeting, held on Sunday while crude markets were closed. Reuters sources suggest a likely agreement for a further September hike of up to 548k BPD, in line or slightly below the August pace. With the 2.2mln BPD of earlier voluntary cuts almost fully unwound, the UAE is reportedly on track to achieve its 300k BPD quota boost ahead of schedule. Traders will parse any compliance commentary and compensation plans for lagging producers, due by August 18th.
In the U.S., Monday brings Employment Trends (Jun) and the Durable Goods Revisions (Jun). While not tier‑one market movers, the employment trends index will provide a read‑through on labor market resilience, with durable goods revisions giving a backward‑looking check on investment momentum ahead of the ISM services survey.
Tuesday
A data-heavy session begins in Asia with China’s Final Caixin Services and Composite PMIs (Jul). Last month’s prints highlighted moderate expansion, and any softening would reinforce concerns over domestic demand amid weakening global trade.
Europe and the U.K. follow with final S&P Global Services and Composite PMIs (Jul). While the flash data suggested the eurozone’s services sector was stabilizing near the 50 line, the U.K. outperformed modestly. Traders will be attentive to any downward revisions that might add pressure to the ECB’s and BoE’s easing narratives.
In North America, Canada’s June Trade Balance is released alongside the closely watched U.S. ISM Services PMI (Jul). The ISM report is pivotal after S&P Global’s flash services PMI spiked to 55.2, a seven‑month high. S&P flagged that July’s growth was “worryingly uneven” and “overly reliant” on services, as manufacturing slipped into contraction. Crucially, it warned that price pressures remained elevated, with selling price inflation among the largest in three years—raising the risk of renewed CPI acceleration above the Fed’s 2% target. A hot ISM print would complicate Fed dovish bets.
Meanwhile, New Zealand’s Q2 Jobs Report will be released, with employment expected at ‑0.2% Q/Q and unemployment rising to 5.3%. Westpac anticipates job losses concentrated among younger workers, alongside moderating wage pressures. A weak print would bolster the RBNZ’s easing bias but could also pressure the NZD, especially in the context of recent tariff escalations.
Wednesday
Focus shifts to monetary policy with the Reserve Bank of India concluding its meeting. After an aggressive 50bps June cut to 5.50% and a shift to a neutral stance, consensus leans toward a hold, with 44 of 57 economists expecting no change and the rest seeing a 25bps cut. Governor Malhotra has emphasized that inflation is under control and growth remains below aspiration, but he has also warned of limited policy space. Markets will watch for the revised liquidity management framework aimed at anchoring overnight rates, using the 7‑day VRR as the primary tool.
In Europe, German Industrial Orders (Jun) and EZ Construction PMIs (Jul) print before EZ Retail Sales (Jun), providing a fuller picture of the bloc’s soft growth trajectory. Weak orders or retail activity could reinforce expectations for ECB accommodation later in the year.
Thursday
A critical central bank day. The Bank of England is widely expected to cut the Base Rate by 25bps to 4.0%, with markets assigning an 83% probability. The vote split will reveal the balance between gradualist cutters and more aggressive doves; consensus suggests a 1:7:1 distribution, with Mann dissenting for a hold and Dhingra favoring 50bps. June CPI rose to 3.6% Y/Y, with sticky services at 4.7%, but growth is slowing, and the MPC is expected to maintain guidance for “gradual and careful” cuts. The Monetary Policy Report may lift the near‑term inflation peak just under 4% and could preview a 2026 Gilt remit cut to GBP 75‑80bln from the current 100bln pace.
In Mexico, Banxico is set to slow its easing pace to 25bps, taking the rate to 7.75%, after four consecutive 50bps cuts. Mid‑July CPI cooled to 3.6% Y/Y, but core inflation remains sticky. Pantheon Macroeconomics warns that trade tensions could weigh on the MXN if Banxico cuts too aggressively.
Additional data highlights include:
- New Zealand Q3 Inflation Expectations, expected to extend their modest upward drift.
- German Trade Balance (Jun), key for assessing export health amid softer Chinese demand.
- Swedish CPIF (Jul), with SEB projecting 3.2% headline and 3.3% core vs Riksbank forecasts of 2.5% and 2.8%, respectively. Any upside surprise could complicate the Bank’s dovish bias.
- China’s July Trade Balance, where ING expects export growth to slow to +4.6% Y/Y and imports to contract ‑1.9% Y/Y. This will be closely watched ahead of the August 12 U.S.-China trade truce expiry and potential energy‑related sanctions.
Friday
North America closes the week with the Canadian July Jobs Report, crucial for the BoC’s hold‑bias. June unemployment hit 6.9%, and soft hiring intentions suggest labor weakness is spreading beyond trade‑sensitive sectors. Any further deterioration could accelerate rate‑cut pricing, with ING expecting at least one cut before year‑end despite money markets only implying 15bps of easing.
In Asia, the BoJ Summary of Opinions will be released, providing color on the Board’s decision to keep the short‑term rate at 0.50% and its cautious stance on further hikes. Governor Ueda’s press conference underscored a lack of urgency, citing stalled underlying inflation and slowing growth. Traders will scan the SOO for any hawkish dissent that could hint at a late‑2025 adjustment.
This week’s calendar reflects a delicate global balancing act: OPEC+ barrels returning to market, services‑driven U.S. growth colliding with sticky inflation, and multiple central banks carefully managing the optics of gradual easing while confronting uneven domestic recoveries. FX and rates markets are likely to remain highly sensitive to surprises in services inflation and jobs data, while crude traders weigh the speed of supply normalization against the risk of compliance slippage.
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