Major Currencies Overview
Trade war concerns and hawkish Fed vibes played a game of tug-o-war on the Greenback last week, although it managed to end up as a net winner.
There’s not much in terms of top-tier data from the U.S. economy this week, which leaves market sentiment and another set of trade-related updates as the main movers. Read more.
The Loonie chalked up its sixth consecutive week of losses as speculations about an increase in OPEC output were the stuff of headlines.
It didn’t help that trade war jitters are also bringing uncertainty to Canadian businesses, and these might be reflected in the BOC Business Outlook Survey and the country’s monthly GDP report due later in the week. Read more.
EUR & CHF
Not even cautious ECB policy guidance and some eurosceptic worries in Italy could keep the euro down as it wound up as the third best-performing currency last week.
Apart from taking advantage of dollar weakness, the shared currency also drew support from positive PMI readings and Greece’s debt deal. Flash CPI readings are due next. Read more.
Positive Brexit developments and a more hawkish BOE tilt supported sterling last week but only enough to amount to a mixed performance.
BOE head honcho Carney still has a speech mid-week, along with the release of the central bank’s Financial Stability Report. Read more.
Safe-haven flows on trade war troubles were music to the yen’s ears last week, allowing it to cap off another winning performance.
The upcoming trade week could see more or less the same type of action as only medium-tier economic reports are due and trade tensions continue to heat up. Read more.
The ongoing trade spat between the U.S. and China, which is Australia’s top trade buddy, didn’t do the Aussie any favors last week.
Without any major catalysts to draw support from again this time, the Aussie could stay highly sensitive to overall market sentiment, although it might be able to find support from gold. Read more.
Much like its neighbor, the Aussie, the Kiwi also had a rough week as it read one downbeat trade-related headline after another. It didn’t help that the dairy auction and quarterly GDP failed to impress.
Kiwi traders are likely to take their cues from the RBNZ monetary policy statement this week, with many expecting a not-so-upbeat announcement. Read more.
Charts to Watch:
Another round of trade war troubles could mean more losses for the Aussie this week, and the channel on the 4-hour chart could offer entry levels. In particular, the 50% Fib is close to the resistance and and area of interest around the .7500 handle, so it might be enough to keep gains in check.
The short-term range on this pair is still very much intact as price just bounced off the bottom again. Another test of resistance at the .8835 level could be in the cards, and stochastic appears to be confirming that sellers are ready to return soon.
Cable could also be ready to resume the downtrend as price is hitting resistance at the 61.8% Fib on the latest pullback. A larger correction could last until the very top of the descending channel closer to the 1.3350 minor psychological level while stochastic heads higher.