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August 3, 2020 08:36 am

Fundamental Forex Forecast for the week of August 3-7, 2020

Monday, August 3


Monday kicks off with the release of Japan's final Q1 GDP data. The country's economy declined 0.6%, as analysts had expected. Q2 data is likely to show a larger decline, following the dynamics of America and Europe. Moreover, the Japanese economy also declined in Q4 2019, so Q2 data will confirm that the country is facing a full-fledged recession, which will inevitably put pressure on the yen.


In the second half of the day, statistics on business activity in the manufacturing sector in Germany and the UK for July will be released. Experts predict the growth of both indicators, which will support the European currency.


The Swiss franc will also be able to strengthen somewhat – due to rising inflation. To be more precise, deflation should slow down from -1.3% to -1.0%.


Tuesday, August 4


On Tuesday, attention should be paid to the meeting of the Board of the Reserve Bank of Australia. Market participants do not expect any changes in monetary policy, but the regulator can share plans for further softening of the rhetoric, if circumstances require it. And this will already be a negative factor for the Australian dollar.


The main event of the day will be the publication of data on producer prices in Europe, where the rate of their decline should remain unchanged. Given the overbought European currency, this report will become an additional driver for a gradual correction.


Wednesday, August 5


Wednesday may start with the weakening of the New Zealand dollar, as the unemployment rate in New Zealand rises from 4.2% immediately to 7.0%. The euro, on the other hand, will receive additional stimulus for growth after the release of data on retail sales, the decline of which may be replaced by an increase of 1.2% in annual terms. Such figures will indicate a confident recovery in consumer activity in Europe, and with it the entire economy.


However, the growth of the euro will be short-lived, as on Wednesday ADP data on US employment, which should rise by 2,100 thousand, is released. And in anticipation of Friday's publication of a report from the US Department of Labor, these data will be a purely positive factor for the dollar.


Thursday, August 6


On Thursday, it is worth paying attention to the meeting of the Board of the Bank of England, the results of which may put pressure on the pound sterling. Even despite the fact that all parameters of the regulator's monetary policy will remain unchanged. The fact is that the situation around Brexit remains extremely uncertain, and the likelihood that the UK will leave the European Union without a full-fledged trade agreement is growing every day.


The main event on Thursday will be the publication of data on applications for unemployment benefits in the US. Experts predict a slight increase in the number of applications.


Friday, August 7


The only thing that will attract investor interest on Friday is the report of the US Department of Labor. Forecasts are quite optimistic: the unemployment rate should fall from 11.1% to 10.5%. Moreover, outside agriculture, 2,200,000 new jobs can be created. Therefore, at the end of the week we can expect a noticeable strengthening of the US dollar, whose positions have been greatly shaken lately.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.
Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.