Major Currencies Overview
The upbeat FOMC statement and presser did little to encourage dollar bulls to charge, but ultimately it was risk-off flows on trade war troubles that spurred strong gains on Friday.
With no major U.S. economic reports on deck, traders could continue to keep close tabs on the trade situation to gauge its potential impact on market sentiment and the dollar. Read more.
The looming OPEC meeting and speculation of adjustments to their output deal kept a tight lid on the Loonie’s gains, and it didn’t help that U.S. tariffs could do a lot of damage on Canada’s export sector.
Canadian CPI and retail sales reports aren’t due until Friday, which means that most of the focus could be on OPEC updates and trade war headlines. Read more.
EUR & CHF
Euro bulls were very disappointed with the ECB announcement as the central bank plans on tapering instead of cutting off QE after September. The franc also had its share of losses but wound up on slightly better footing versus the shared currency.
ECB head Draghi has a few speeches lined up this week, so traders would likely keep their ears peeled for more clues. The SNB decision is coming up but no changes are eyed as usual. Read more.
Sterling saw mostly sideways price action as upbeat Brexit developments contrasted with U.K. data results.
Apart from that, the consolidation might also be due to pound traders taking it slow ahead of the BOE monetary policy statement scheduled this week. Read more.
Even though it was off to a shaky start, the yen managed to catch strong gains towards the end of the week as escalating trade tensions boosted risk aversion.
BOJ Governor Kuroda has a speech scheduled mid-week but other than that, there are no major catalysts lined up from the Japanese economy. That leaves sentiment as the main driver of yen pairs again! Read more.
The Aussie found itself at the bottom of the forex pile as trade tensions between China and the U.S. could hurt demand for the Land Down Under’s commodity exports.
The RBA meeting minutes and a speech by Governor Lowe are on this week’s docket, so these should provide more clues on the central bank’s direction. Still, trade-related updates could carry more weight. Read more.
The Kiwi ended another week as a net winner even as the lack of top-tier releases from New Zealand left the currency sensitive to its counterparts’ price action.
The quarterly GDP is due this week so the focus could shift back to New Zealand fundamentals, but it’s likely that trade updates could hog the spotlight. Read more.
Charts to Watch:
After busting through support around the 1.1750 minor psychological mark, this pair went on a steep dive all the way to 1.1543 before bouncing. This could mark the start of a quick pullback before the selloff resumes, and the Fibonacci retracement tool shows where sellers might be waiting.
Stochastic is already heading south to show that sellers are eager to jump back in, which suggests that this correction could be a shallow one.
This pair gained more downside momentum since breaking below the mid-channel area of interest we were watching last week. This could send it all the way down to support around the 81.50 minor psychological mark, and the oversold stochastic suggests that a bounce might be due. Can the uptrend stay intact?
Here’s one for the swing traders out there! GBP/AUD looks set to resume its uptrend as it bounced off the bottom of the ascending channel on the daily time frame. Price could aim for the top around 1.8700 from here or at least go for the mid-channel are of interest at 1.8100 as stochastic nears overbought levels.