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The upcoming week will feature key economic data releases and central bank communications that could influence the Federal Reserve's rate hike trajectory. The ISM Services PMI for May and the Fed's minutes from its June meeting will be critical in assessing the U.S. economic health and policymakers' stance. Market participants are also watching for clues about the timing of the next rate hike, which remains on the table despite recent mixed data. The RBNZ is expected to raise rates, while the ECB's minutes and China's CPI data will add to the week's volatility.
For forex traders, these events could trigger significant USD movements as the market digests the Fed's policy outlook. A stronger-than-expected ISM PMI might reinforce hawkish bets, while dovish signals could pressure the dollar. The EUR/USD pair is particularly sensitive to Fed policy shifts, making it a key asset to monitor. Traders should also consider the broader impact on global risk sentiment, especially with China's CPI data influencing commodity prices.
Investors in the Gulf and MENA region should watch how these developments affect USD liquidity and cross-currency spreads. The Fed's forward guidance will be crucial for carry trade positioning, while oil prices may react to changes in USD strength. Key watchpoints include the ISM Services PMI (expected at 54.5) and the Fed's tone on inflation and employment in its minutes.
