Weekly Market Update 9 July – RBA held rates steady; US Core CPI, BOC Monetary Policy Report and RBNZ interest rate decision in focus next week

Weekly Market Update 9 July – RBA held rates steady; US Core CPI, BOC Monetary Policy Report and RBNZ interest rate decision in focus next week

1. Dollar held steady against the major currencies following the release of the FOMC meeting minutes. Last week was a relatively quiet week for the Dollar as investors will keep a close watch on the US Core CPI, PPI, and core retail sales data later this week. FED Chairman Jerome Powell is also expected to speak on Thursday. 

2. Across the Atlantic, Sterling strengthened against the Dollar and the commodity currencies. Investors saw a slight rebound after last week’s dip in Sterling following BoE’s minutes release. Looking ahead, UK would be releasing the CPI, PPI and unemployment rate data.

3. Commodity currencies continued their bearish run against the Dollar last week. Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech earlier midweek was relatively hawkish. RBA’s decisions to retain its three-year target to November 2024 and to taper its bond-buying programme imply that the monetary policy could be tightening. However, the bearish market outlook of the Aussie Dollar shows the market sentiment was still dovish as the recovery was not enough to signal an earlier interest rate hike. RBA Cash Rate was held at a record low of 0.1% as the country is slated for more growth. This week, all eyes would be on the Reserve Bank of New Zealand (RBNZ) interest rate decision and Australia’s unemployment rate. 

4. Canadian Dollar dipped against the major currency pairs despite a positive employment outlook. This was mainly due to the Organization of Petroleum Exporting Countries (OPEC) cancelling their upcoming production meeting. Elsewhere, Canada expanded with over 230,700 new employments with their unemployment rate dropping from 8.2% to 7.8%. The massive jump in jobs was mainly due to their economy reopening across the country. However, the gain was unable to recover from the jobs lost over the April and May periods. Investors would be focused on the Canadian monetary policy report as they look towards a relatively dovish backdrop later this week.