Major Currencies Overview
A mix of slower tightening hopes shared in the FOMC minutes and geopolitical risks stemming from Trump’s calling off his date with Kim Jong-Un weighed on the dollar for the most part of the week.
However, it managed to pull up a bit higher as chances of a North Korea-U.S. meeting were revived. This positive sentiment and expectations for the NFP release on Friday could be in play this week. Read more.
Crude oil retreated off its highs on speculations that the OPEC could make adjustments to their output deal, causing the Loonie to end in the red, except against the euro and pound.
The spotlight could shift to Canada’s fundamentals this week since the BOC is gearing up for its monetary policy statement. How might that turn out? Read more.
EUR & CHF
And that makes four for the euro! Losing weeks, that is. The shared currency found itself at the bottom of the forex pile once more, mostly due to political uncertainty from Italy.
Meanwhile, the franc was pulled in opposite directions by risk sentiment and its slight correlation with the euro. More of the same dynamics could be seen this week since there are no major reports due from both economies. Read more.
Sterling was already off to a weak start then the downbeat CPI report hit the nail on the coffin as bears got further confirmation that the BOE might refrain from tightening anytime soon.
There are no major reports due from the U.K. this week, which suggests that Brexit updates could once again carry more weight. Read more.
What a comeback for the Japanese currency! The yen emerged as the strongest performer of the week, thanks to sliding U.S. bond yields and returning risk aversion.
Sentiment could continue to push the yen around for the next few days, but fading geopolitical tensions could force the lower-yielding currency to retreat. Read more.
The Aussie chalked up quite a decent run for the previous week as it landed among the net winners once more. Higher gold prices on geopolitical uncertainty allowed the positively-correlated currency to stay afloat.
There’s not much in the way of top-tier reports from Australia again this week, which suggests that the Aussie could stay sensitive to risk flows. Read more.
The Kiwi had another mixed round as it tossed and turned on changing risk sentiment. Still it managed to take advantage of dollar weakness, along with the drop in the euro and pound.
Another catalyst-free week for New Zealand could leave the Kiwi trailing behind the Aussie on risk sentiment once more, so better keep tabs on political headlines! Read more.
Charts to Watch:
It looks like the top of the daily descending channel on USD/JPY held like a boss once more, allowing the steady downtrend to resume.
Stochastic is heading south, so the pair could slide to the next downside targets, possibly at the 50% extension around 107.00 or the full extension closer to the channel bottom. Just make sure you keep tabs of NFP expectations and results when trading this one.
If you think the euro selloff is overdone, you might wanna keep your eyes on this potential EUR/NZD countertrend setup. Price is closing in on the bottom of its rising channel while stochastic looks ready to pull up from the oversold region, possibly triggering a bounce off 1.6800 to the top at 1.7350 or the mid-channel area of interest.
If you think the euro is in for more losses and you’re looking for a neat trend to follow, this pullback scenario on EUR/CAD could be a good bet. Price has been cruising below a descending trend line, and a correction to the 38.2% to 50% levels might take place. Just be mindful of crude oil price action since this setup involves the positively-correlated Loonie.