Major Currencies Overview
Dollar domination was the name of the game last week, thanks to robust inflation expectations and hawkish Fed views.
Can the Greenback continue to shrug off trade war jitters this time? Apart from the U.S. retail sales release, there’s not much in the way of top-tier data that could keep the spotlight on fundamentals. Read more.
Oil-related updates kept a lid on the Loonie’s rally, even after the BOC announced an interest rate hike as expected.
Canada’s CPI and retail sales reports won’t come around until the end of the week, which suggests that crude oil action could drag the correlated Loonie around once more. Read more.
EUR & CHF
Euro pairs were all over the place for the most part of the previous week as the shared currency simply reacted to sentiment and its counter currencies. The franc, meanwhile, proved no match to dollar strength.
The same kind of behavior could be seen this trading week since the coast is clear in terms of economic catalysts from both the euro zone and Switzerland. Read more.
Sterling was off to a rough start on the unfolding Brexit drama but managed to get back on its feet before the week closed.
A handful of top-tier releases are lined up from the U.K. this week, likely putting the focus back on improving fundamentals and rate hike expectations. Read more.
Risk sentiment and bond yields did a number on yen price action for the previous week, dragging it down to last place.
These themes could stay in place in the coming days as traders continue to keep close tabs on global trade matters. Read more.
Improving risk sentiment allowed the Aussie to claw its way up to being the second-best performing currency of last week.
China’s data dump, the RBA minutes, and Australia’s jobs report are just among the major events that could rock the Aussie’s boat this time. Read more.
Unlike its neighbor, the Aussie, the New Zealand dollar was unable to take advantage of risk-on flows since dollar strength mainly weighed it down.
The quarterly CPI report due this week could put some attention back on NZ fundamentals, as well as RBNZ policy expectations, but that might not necessarily be a plus for the Kiwi. Read more.
Charts to Watch:
After making a sharp upside breakout last week, USD/JPY looks prime for a pullback as it hits the top of its ascending channel on the 4-hour chart. Stochastic is also starting to turn lower from the overbought region to signal profit-taking at current levels, possibly taking the pair to the area of interest around the 50% to 61.8% Fibs.
Don’t look now, but GBP/CHF is just making a bounce right off the bottom of its long-term ascending channel. This could be a prime opportunity to catch a long position all the way to the top around the 1.4100 handle or at least halfway through. Just make sure to keep tabs on Brexit-related headlines or top-tier U.K. releases!
Here’s another trend pullback play on the 1-hour chart of USD/CHF. Price is also testing the channel top and might be due for a correction to the area of interest spanned by the 38.2% to 50% Fibonacci levels. Stochastic is already indicating oversold conditions and a slight bullish divergence, though, so buyers might be eager to return.