Major Currencies Overview
The ever-shifting mood when it comes to trade issues led to a lot of tossing and turning for the Greenback in the previous week, but it still managed to put an end to consecutive weekly losses.
It’s the start of a brand-new month, which means that NFP Friday is coming up and might steal the spotlight towards the end of the week. How might this turn out? Read more.
NAFTA optimism on the U.S.-Mexico trade deal early in the week lost its magic as the days went by, particularly when it became apparent that an agreement wouldn’t be ready by Friday.
It didn’t help that Canada’s monthly GDP was a disappointment, too. This time, the focus could still be on NAFTA negotiations, but the Canadian jobs data due Friday could also spur big moves. Read more.
EUR & CHF
A hodgepodge of headlines related to Brexit, trade tensions, and Italy’s debt did a number on the euro last week while the franc stayed ahead of the pack for the most part.
There are no top-tier reports due from the euro zone and Switzerland this week, which suggests that their currencies could be sensitive to sentiment and non-calendar updates. Read more.
Sterling got a strong boost on hopes that the EU could retract its claws in Brexit negotiations, although it’s worth noting that several officials still insist on prepping for a “no deal” outcome.
U.K. industry PMIs and the BOE Inflation Report hearings could steal the show in the days ahead, but it’s likely pound traders would keep an eye out for Brexit developments. Read more.
In the absence of top-tier catalysts in Japan, the lower-yielding yen still managed to rake in some pips on account of risk sentiment and bond yields.
A number of medium-tier reports are due towards the latter part of the week, but yen traders might keep taking their cues from overall risk sentiment and dollar demand. Read more.
The Aussie closed off the week in last place due to worsening trade tensions between the U.S. and China, as well as the Westpac hike on variable home loan rates.
Not only will we get the RBA’s thoughts on interest rates with their policy decision this week, but Aussie traders could have a lot to chew on with the quarterly GDP and trade balance lined up. Read more.
Misery sure loves company, doesn’t it? The Kiwi joined its buddy, the Aussie, in the losers’ bench last week as trade tensions and weak rate hike prospects returned to the limelight.
New Zealand’s economic schedule is clear this week, which means that the Kiwi could take its cues from the Aussie, trade updates, and risk appetite. Read more.
Charts to Watch:
First up is this bearish momentum opportunity on the 4-hour time frame of USD/CHF. Price broke below a short-term consolidation to signal that sellers have won over and could take the pair all the way down to the channel bottom around the .9150 mark.
However, bears might be running out of energy to push past the mid-channel area of interest around .9650 as stochastic just hit oversold territory. A return in buying pressure could lead to a quick pullback to nearby resistance levels before the slide resumes.
Here’s another channel momentum setup that’s still got a few pips to go! NZD/JPY is also trending lower inside a descending channel and has just bounced off the resistance.
Price is currently testing the mid-channel area of interest with stochastic in the oversold region. A return in bullish pressure could spur another pullback to the top or just a small bounce before more Kiwi bears hop in to force the slide to carry on until the channel bottom around 72.00.
Not a fan of channels? You might like this consolidation chart pattern on CAD/JPY better. Price bounced off the ascending triangle top and looks ready for another test of support close to the 84.00 major psychological mark.
Stochastic is already indicating oversold conditions, which means that sellers could use a break soon. If support holds, another test of the resistance at 86.30 could take place. But if Loonie bears are strong enough, they could push for a breakdown and sustain a selloff that’s the same size as the triangle.