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
Dollar pairs were all over the place last week as currency-specific factors dominated while the Greenback remained slightly weaker versus its lower-yielding peers.
A few top-tier reports are on this week’s docket, namely CPI, PPI, and retail sales, so the focus might shift to fundamentals. Keep in mind, however, that not even the stronger than expected NFP read was enough to shore up the dollar as wage growth remained feeble. Read more.
Although the Loonie took some directional cues from crude oil at certain points last week and was pushed around by NAFTA updates, the Canadian currency was also slightly vulnerable to its counterparts’ movements.
There’s not much in the way of top-tier data from Canada in the next few days, which suggests we could see more of the same behavior. As for crude oil, the latest drop in rig counts could lead to a smaller build in stockpiles this week. Read more.
EUR & CHF
This European tandem was stuck at the bottom of the forex heap in the previous week, with the shared currency failing to hold on to its post-ECB statement gains.
It will be the SNB’s turn to announce their policy statement and no changes are eyed. This particular event doesn’t really cause huge swings in franc price action, unless of course there’s a surprise announcement. Read more.
Sterling shrugged off Brexit jitters like it was nobody’s business as the currency was able to score some gains from upbeat U.K. services PMI.
There are no major reports lined up from the U.K. this week, so there’s a pretty good chance that Brexit headlines could play a key role in pound price action. Keep in mind that U.K. officials ain’t happy about the EU Brexit draft guidelines, so there may be a few strong remarks here and there. Read more.
You win some, you lose some! Unfortunately for the yen, the previous week was spent mostly on the losing end. The BOJ decision didn’t really cause any fireworks, but it’s worth noting that Governor Kuroda downplayed expectations of a QE exit anytime soon.
There are no major reports due from Japan in the days ahead, so market sentiment and bond yields could continue to push yen pairs around. Read more.
Aussie bulls were finally able to charge in the previous week, even though most of the Land Down Under’s reports fell short of expectations. Risk appetite was seen as one of the main factors shoring up the commodity currency then.
This week, Australia will take a chill pill from releasing major reports, which leaves sentiment as the main driver of price action. China also has its data dump coming up and downbeat data might force AUD to return its recent wins. Read more.
The Kiwi was also one of the big winners in the previous week, second only to its commodity currency buddy, the Aussie. Updates on North Korea and Trump’s tempered tone on tariffs helped prop up this currency.
The main event for New Zealand this week is its GDP release, which might show a slightly stronger pace of growth compared to the previous period. Read more.
Charts to Watch:
Reversal pattern alert! This pair seems to have already broken past the inverse head and shoulders neckline to signal that more gains are in the cards. But all this could hinge on the outcome of U.S. top-tier data and the SNB announcement.
With the New Zealand GDP up for release this week, this pair could be in for big moves, possibly making its way up to the range resistance around the .7420 area. Stochastic is already indicating overbought conditions, though, so a drop back to support may still be in order.
If you’re in the mood for longer-term plays, this descending triangle on NZD/JPY is worth watching. Price just bounced off support and might be due for a move all the way to the top while stochastic is pointing north. Just make sure you keep close tabs on risk sentiment when trading this!