Key points:

• Fed rate statement and US employment report may affect investors' bets on the Fed's interest rate cuts in September and December.
• Economists predict that the Bank of England will announce a rate cut, which could lead to a depreciation of the pound.
• The Bank of Japan will also announce its highly anticipated monetary policy decision this week.

Dollars

On Tuesday, July 30th, job vacancies in the US Consumer Confidence Index and the US Labor Mobility Survey (JOLTS) will affect demand for the US dollar. The rise in consumer confidence may promote consumer spending and demand driven inflation.

In addition, higher job vacancies may indicate a tightening labor market, supporting wage growth. Higher wages may increase disposable income and drive consumer spending. The signal of consumption growth may alleviate expectations of multiple Fed interest rate cuts in 2024.

On Wednesday, July 31st, ADP's non farm payroll data will attract investors' attention. If the growth is lower than expected, it may increase the bet on multiple Fed rate cuts in 2024. A softer labor market may affect wage growth and reduce disposable income.

On Thursday (August 1st), the application for unemployment benefits also needs to be considered. An increase in the number of applicants will indicate a deterioration in labor market conditions.

The US employment report released on Friday (August 2nd) will be the key data. The decline in wage growth and the rise in unemployment rate will increase expectations for the Federal Reserve to raise interest rates in September and December.

The Federal Reserve's FOMC interest rate decision and statement will also be released on Wednesday. Investors expect the Federal Reserve to keep interest rates unchanged. However, implying multiple interest rate cuts in 2024 may affect the demand for the US dollar.

Euro

On Monday (July 29th), retail sales in Germany may affect the path of interest rates for the euro/dollar and the European Central Bank. The further decline in retail sales may alleviate inflationary pressures and support a more moderate path for European Central Bank interest rates.

On Tuesday, we need to consider the GDP data of France, Germany, and the Eurozone. If the data is lower than expected, it will give the European Central Bank reasons to cut interest rates in September to support the eurozone economy.

However, Tuesday's inflation data in Germany needs to reflect the softening of inflationary pressures. The European Central Bank's focus remains on wage growth and inflation.

On Wednesday, inflation data from the eurozone will affect the interest rate path of the European Central Bank. Lower than expected data may consolidate the expectation of the European Central Bank's interest rate cut in September.

The Eurozone unemployment rate and the final manufacturing Purchasing Managers' Index (PMI) data for the Eurozone and member countries will be released on Thursday. Unless preliminary data from the eurozone is revised, the unemployment rate may have a greater impact on the euro/dollar. A higher unemployment rate will support investors' bets on the European Central Bank's interest rate cut in September.

Pound Sterling

On Thursday, house prices and the final manufacturing purchasing managers' index could influence demand for the pound. Rising house prices could indicate strong demand and a resilient U.K. economy, testing investor expectations for a Bank of England rate cut in 2024.

The BoE will also announce its August interest rate decision on Thursday. Economists expect the BoE to cut rates by 25 basis points. The rate cut and hints of a second cut could reduce demand for GBP/USD. The vote could indicate how dovish the BoE is on monetary policy.

Canadian Dollar

On Wednesday, Canada's GDP data will keep the Canadian dollar in the spotlight. An unexpected contraction in the Canadian economy could increase investor bets on a third rate cut by the Bank of Canada.

Increased expectations of a rate cut by the Bank of Canada will affect demand for the Canadian dollar.

AUD

On Wednesday, inflation and retail sales will influence demand for the Australian dollar. However, inflation data could have a bigger impact on AUD/USD. Rising inflation in the second quarter could force the Australian Fed to raise interest rates.

On Friday, Producer Prices could also affect the Australian Fed's rate path. Economists consider producer prices to be a leading indicator of consumer prices. Producers raise prices in an environment of rising demand and pass the cost on to consumers.

Other statistics include housing sector data. However, inflation data may have a greater impact on AUD/USD.

Japanese Yen

On Wednesday, the much-anticipated Bank of Japan monetary policy decision and press conference will influence demand for the Japanese yen. Uncertainty over the Bank of Japan's monetary policy outlook hangs over the yen. If the Bank of Japan raises interest rates and significantly reduces its purchases of Japanese government bonds (JGBs), it could narrow the interest rate gap with the U.S. dollar and push USD/JPY lower.

Forward guidance could be crucial to boosting JPY demand. Hints at the possibility of more rate hikes and further reductions in purchases of JGBs could boost yen demand.

China

On Wednesday, private sector purchasing managers' index (PMU) data from the National Bureau of Statistics (NBS) needs to be considered. A more pronounced contraction in the manufacturing sector, as well as a contraction in the services sector, could weigh on market risk appetite.

However, the Caixin Manufacturing PMU may influence market risk sentiment more. Softer manufacturing activity could indicate weaker growth in Q3 2024, raising expectations for more stimulus measures to support China's economy.

China's economy grew by 4.7% in the second quarter of 2024, down from 5.3% in the first quarter.