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
Fears of a trade war after Trump’s tariff announcement spurred a fresh wave of selling for the U.S. dollar, but the currency managed to retain its lead versus the commodity currencies.
Can risk aversion extend its stay in the markets this week? Keep in mind that the NFP release is lined up, so the focus could switch back to fundamentals. Read more.
The Loonie was hit by a triple whammy of unimpressive data, falling oil prices, and trade war concerns in the previous week. No wonder it was the worst-performing currency then!
There are a couple of top-tier catalysts that could turn the tide in the Loonie’s favor, though, namely the BOC statement and the Canadian jobs release. Or will these accelerate the selling? Read more.
EUR & CHF
It was a mixed round for the euro and franc as both managed to bank on their safe-haven appeal but were no match to the Japanese yen.
The ECB decision could steal the show for the shared currency this week as traders are eager to learn when the central bank might start hiking. Note that Draghi’s latest testimony was a bit on the hawkish side, so positive expectations are already in place. Read more.
Brexit concerns popped back up like a zit that won’t quit for the pound, forcing bulls to retreat for the rest of the week.
The services PMI is the only major release from the U.K. so it’s likely that market watchers will be keeping extra close tabs on Brexit-related headlines and what both EU and U.K. officials have to say about the draft agreement. Read more.
Once again, the mighty yen was the king of pips as it took advantage of risk aversion and dollar weakness. Oh, and did I mention that the BOJ did another mini-taper?
This means that yen traders will be watching the BOJ decision closely this week to see if they can spot more clues about when the next “taper” might happen. Either that or risk sentiment could hog the spotlight once more! Read more.
Risk aversion stemming from Trump’s announcement on imposing higher tariffs on steel and aluminum imports weighed heavily on the Aussie as this could mean lower demand for its raw material exports.
The RBA is set to make its policy announcement on Tuesday’s Asian session and forex junkies are keen to see if Governor Lowe can maintain his previous slightly hawkish bias given the latest developments. Read more.
Interestingly enough, the Kiwi put up a pretty good fight against risk-off vibes in the previous week as positive news from its dairy industry lifted the currency.
There’s not much in the way of top-tier reports from New Zealand this week, except maybe for the GDT auction results and manufacturing sales data. Read more.
Charts to Watch:
I don’t know about y’all but this seems like a legit complex double bottom for me! USD/CAD has actually created one reversal pattern after another, signaling that more gains are in the cards. So far, the Loonie has been the worst-hit by falling oil prices, risk aversion, and NAFTA concerns.
Aiming for channel support? Price seems to be breaking down the mid-channel area of interest to reflect a pickup in selling pressure, which might take it down to the 1.2600-1.2650 level if Brexit concerns stay in play.
Last but certainly not least is this classic break-and-retest setup on EUR/AUD as the pair recently busted through the 1.5800 resistance level. A pullback could find support at the 50% Fib, which coincides with this area of interest.