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
A mix of risk aversion on the stock selloff plus positive PMI readings lifted the Greenback against most of its peers last week, except against its lower-yielding rival, the Japanese yen.
This week ain’t exactly filled to the brim with top-tier reports, although we’ve got the CPI and retail sales figures due. Other than that, investor sentiment and volatility could push dollar pairs around. Read more.
Loonie pairs had some trouble establishing a clear direction in the previous week, as the Canadian currency barely took cues from crude oil and sentiment.
The next few days might be more or less the same as there are no major reports from Canada. The only things to look out for are its version of the ADP jobs report, manufacturing sales, and foreign securities purchases. Read more.
EUR & CHF
The shared currency was one of the weaker performers in the previous week as it barely drew support from news that Germany finally sealed the deal on a coalition.
The lack of potential market-moving data this week could keep investors focused on German coalition updates, especially since the parties have yet to vote on whether or not to accept the deal towards the end of the month. Read more.
Upgraded economic forecasts? Check! Stronger rate hike expectations? Check again! None of these were enough to buoy sterling higher last week, though.
A couple of top-tier reports, namely CPI and retail sales, are on this week’s docket and these might underscore hawkish BOE prospects and keep the pound supported. Read more.
Risk sentiment moved in favor of the lower-yielding yen as the sharp declines in equities at the start and middle of the week sent traders scurrying for the safe-havens.
Only a few low-tier reports are scheduled from Japan this week, which suggests that sentiment could still be the main mover in the next few days. Read more.
A cautious RBA statement and a surge in risk aversion were being blamed for the Aussie’s dismal performance to end as the weakest performing currency last week.
This time, the Australian jobs report could put some attention back to fundamentals, but it would take a strong result to revive AUD strength. What are analysts predicting? Read more.
Upbeat fundamentals kept the Kiwi somewhat supported amid the influx of risk-off flows in the previous week, but can it keep hanging on?
Inflation expectations are up for release this week, and it’s a bit ominous that the RBNZ already downgraded their estimates recently. Apart from that, sentiment could still lead to some quick moves here and there. Read more.
Charts to Watch:
First off is this neat break-and-retest play on our risk-off duo, CHF/JPY. Price is currently retesting the broken resistance at the 116.00 major psychological level, which lines up with the 50% Fib. Stochastic is already pulling up to show that buyers are ready to get back in the game.
Reversal alert! GBP/NZD is forming a head and shoulders pattern on its 4-hour time frame to signal that it’s tired from the climb.
Price has yet to break below the neckline of the formation, though, and it could hinge on the NZ inflation expectations figure or the top-tier data from the United Kingdom. That and market sentiment of course!
If you’re pound bullish, then here’s a setup that’s worth looking at. GBP/CHF has been trading inside an ascending channel on its daily time frame and is just testing the mid-channel area of interest with stochastic indicating oversold conditions.
However, it’s important to note that the U.K. currency barely drew support from a hawkish BOE Super Thursday as risk aversion was the name of the game last week.