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 saw red for the most part of the week, and it wasn’t because of Valentine’s Day! Analysts pinned the blame on weak retail sales data, risk-taking, and worries about the fiscal deficit, among many other factors.
This week, the spotlight could shift to fundamentals and monetary policy as the FOMC gears up to print the transcript of its latest meeting. Strong rate hike hints could lend some support for the Greenback, but sentiment could still be king. Read more.
As the saying goes, misery loves company. The Loonie joined its North American buddy in the losers’ bench last week, despite the bounce in crude oil prices.
NAFTA-related jitters appeared to weigh on the Canadian currency, and this could go on for the next few days. Apart from that, Canadian CPI and retail sales could also lead to some directional moves. Read more.
EUR & CHF
Euro price action was as mixed as the results of the region’s economic reports, and the franc mostly followed along while taking advantage of dollar weakness.
This week, euro traders have their eyes set on the release of the ECB meeting minutes as this could set the record straight on when QE might end and rate hikes might start. Read more.
Not even stronger than expected CPI reports were enough to lift the pound higher across the board for the rest of the week as retail sales turned out to be a disappointment.
The jobs report is up for release this week, to be followed by the BOE Inflation Report hearings. Recall that the central bank upgraded their forecasts in the actual report, so hawkish expectations could be in play. Read more.
Headlines on the potential renewal of BOJ head Kuroda’s stint as the head of the Japanese central bank pushed the yen around last week while it tried to snatch some risk-off flows away from the dollar.
The lack of any major reports from Japan this week could leave yen pairs sensitive to market sentiment and global bond yields as usual. Better stay on the lookout for more remarks from Japanese officials, too. Read more.
The Aussie snagged some wins against the Loonie and dollar but lost ground to the rest, winding up as the third-weakest currency of the week.
RBA meeting minutes are up for release this week, but the commodity currency could stay sensitive to risk sentiment and gold prices. Read more.
Improved RBNZ inflation expectations seemed enough to keep the Kiwi supported for the most part of the week as traders recalled that the central bank is open to hiking by Q2 next year.
A couple more quarterly reports, namely PPI and retail sales, are on the docket this week so it should be another exciting one for the Kiwi. Read more.
Charts to Watch:
First off is this descending channel that Cyclopip has got his eye on for quite some time. Sterling could be setting up for another rally with the BOE Inflation Report hearings and jobs release while the ECB minutes could contain a few jawboning remarks here and there.
This pair is back to testing the top of its long-term range near the .7450 level, and another round of dollar weakness could send it over the top. Downbeat PPI and retail sales data from New Zealand or a return in risk aversion could allow the ceiling to hold, though.