Three markets to watch next week (08.07.2022)

Following the release of the NFP report for June, markets' attention is now shifting to US CPI data for June, which will be released on Wednesday. USD and gold traders will look for hints whether there is a chance for a change in Fed's policy. Speaking of central banks, investors will be offered rate decisions from the BoC and RBNZ which may cause additional volatility on the markets. Be sure to watch GOLD, AUDNZD and USDCAD next week.

AUDNZD

The Reserve Bank of New Zealand is set to review its monetary policy settings on Wednesday. Markets are pricing in a 100% chance of a 50 bps rate hike and a 67% chance of a 75 bps rate hike. However, investors will also focus on comments regarding the future path of rates for the RBNZ. Recently, the central bank suggested that the economy could enter into a recession in 2023 after a weak business opinion reading. Some analysts expect that the pace of interest rate hikes may slow down in the upcoming months. AUDNZD traders should also pay attention to important readings from Australia, which include Westpac Consumer Confidence Index on Wednesday and jobs data which will be released.

GOLD

Release of the NFP report for June was a main event this week. Investors will have to wait for another key report from the US economy until Wednesday, as that's when CPI inflation data for June will be released. Market expects headline price growth to accelerate slightly from 8.6 to 8.7% YoY and core gauge to move from 6.0 to 5.9% YoY. While deceleration would be welcome, it is unlikely to be big enough to discourage the Fed from pausing tightening. A higher-than-expected reading could strengthen the case for a more aggressive approach and have a negative impact on gold.

USDCAD

Next week, central bank meetings besides New Zealand will also be held in South Korea. However, the BoC meeting, which will take place on Wednesday, arouses the greatest interest among investors. The Bank of Canada is expected to hike rates by 75bp to 2.25%. The central bank sees the “neutral” range for the policy interest rate as 2-3% and investors would like to hear whether the central bank still plans to push rates to the top of the range, taking into account the gloomy macroeconomic outlook. US investors await Q2 earnings season to kick off next week for an update on the private sector condition. Markets may also react to the other key US macro data, namely PPI figures and jobless claims on Thursday and preliminary UoM consumer sentiment and retail sales data on Friday.