Start your trading prep with a quick review of last week’s forex action from my buddy Pip Diddy, an overview of catalysts lined up for the major currencies, and the charts to watch this week.
Major Currencies Overview
The Greenback had another rough one last week after China was rumored to be trimming its holdings of U.S. Treasuries, but the U.S. currency pared some of its losses on mostly upbeat CPI and retail sales releases.
The tide could turn this week with the quarterly earnings season in full swing. Recall that positive expectations for these numbers earlier on and the impressive streak of U.S. equities have been enough to keep the Greenback supported. Read more.
The Loonie also had more than its fair share of troubles in the previous week since fears of the U.S. withdrawing from NAFTA spurred doubts about BOC tightening.
This brings us to the major CAD catalyst this week as the BOC will actually be making its policy announcement on Wednesday’s U.S. session. Think they’ll be ready to hike again or will the BOC disappoint? Read more.
EUR & CHF
Upbeat ECB minutes sparked another leg higher for the shared currency while its buddy, the franc, trailed behind. There’s not much in the way of top-tier data from the euro zone this week, though.
Still, the updated CPI readings could reinforce the central bank’s shifting policy bias while SNB head Jordan’s speech could also give the franc more direction. Read more.
Prime Minister May’s cabinet reshuffle last week barely provided support for sterling, but the British currency still managed to stage a runaway rally at the end of the week on Brexit updates.
The spotlight could shift back to U.K. fundamentals this week, with CPI and retail sales data lined up. Can these shore up BOE tightening expectations? Read more.
A surprise adjustment in the BOJ’s purchases of long-dated bonds early in the previous week led to a sharp rally for the Japanese currency, and further tapering expectations allowed the yen to be the king of pips then.
Only medium-tier reports like the tertiary industry activity index and core machinery orders are lined up this week, but these could still be excellent day trading catalysts. Other than that, the yen could take its cue from sentiment and global bond yields once more. Read more.
Gold and iron ore prices usually influence Aussie price action, but it looked like the currency paid more attention to sentiment and fundamentals last week. In particular, the Aussie got a boost from the upside surprise in the Land Down Under’s retail sales figure and might also have a strong reaction to this week’s jobs data and China’s data dump. Read more.
The Kiwi finished off the previous week as the second-best performing currency, taking advantage of the pickup in risk appetite and dollar weakness. Another round of top-tier data from China is lined up this week, and this would likely play a role in Kiwi price action. Read more.
Charts to Watch:
CAD/JPY is finding support just below the 89.00 handle, which is near the mid-channel support on the daily time frame. What’s interesting about this is that stochastic is nearly oversold. Will this mean a bounce for the Loonie against the yen?
AUD/NZD is having trouble breaking below the 1.0900 major psychological handle, which isn’t surprising since the level lines up with a mid-channel support that has been an area of interest for the pair since February last year.
With the 200 SMA holding as support and stochastic flashing an oversold signal, will Aussie bulls party in the streets again? Watch this one closely, fellas!