Major Currencies Overview
Dollar domination came to a halt last week as the U.S. currency found itself near the bottom of the heap when Trump talked smack about Fed tightening.
Other than the advanced Q2 GDP reading due on Friday, there are no other main events on the U.S. economic schedule, which leaves sentiment and any surprises from Trump as potential driving factors. Read more.
Stronger than expected Canadian data and positive NAFTA remarks helped lift the Loonie’s spirits last week, but the currency seemed to be breaking off its oil correlation.
There are no major releases from Canada this week, though, so this relationship with Black Crack could be renewed or traders might keep pricing in BOC tightening hopes. Read more.
EUR & CHF
The shared currency bagged a few more wins than usual, even as most of its moves took cues from counterparts and sentiment. Meanwhile, the franc rose to the top spot thanks to risk-off flows and some anti-dollar action.
Leading indicators from the euro zone are lined up throughout the week, but the ECB decision is likely to steal the show. Think Draghi and his men will disappoint again? Read more.
All that buzz about a likely “no deal” Brexit situation weighed heavily on sterling last week, preventing it from banking on mostly upbeat data.
Without any major reports due from the U.K. in the days ahead, the British currency could find itself more vulnerable to Brexit-related headlines and signs of a political fallout. Read more.
The lower-yielding yen managed to snag some risk-off flows since traders weren’t exactly feeling the love for the U.S. dollar on most days.
There’s not much in the way of top-tier data from Japan again, which leaves market sentiment as the main driver of yen price action. Read more.
Trade tensions between the U.S. and China continued to keep a lid on the Aussie’s gains, and it didn’t help that gold also chalked up some losses.
Australia’s CPI is up for release this week, though, and this quarterly report could make or break RBA rate hike expectations. Read more.
Changing risk sentiment did quite a number on the Kiwi last week, but it ultimately ended on a mixed note since it was mostly sensitive to its counterparts, too.
The same could be the case this coming week if trade tensions stay in the spotlight and New Zealand’s trade balance disappoints. Read more.
Charts to Watch:
Here’s an update on the USD/JPY channel correction setup we were watching last week. Price is now down to the area of interest and Fib levels while stochastic has reached oversold territory, so a turnaround might happen sooner or later. Might be best to wait for the oscillator to start pulling up to reflect a return in buying pressure before jumping in long.
Don’t look now, but EUR/USD is testing the top of its symmetrical triangle on the 4-hour time frame. Could it be due for a bounce or a break? Stochastic is already indicating overbought conditions but hasn’t turned lower to signal that sellers are returning. The chart pattern spans around 300 pips in height, so a breakout in either direction could be followed by a rally or selloff that’s the same size.
If you like going with the flow, then this descending channel pullback setup on Cable could be a good play. Price just bounced off support and is making its way back to the top near the 1.3200 mark, but the Fib levels might keep gains in check. Stochastic is dipping into the overbought region to reflect exhaustion among buyers after all.