Major Currencies Overview
Dollar bulls were feeling hella good thanks to upbeat U.S. data, hawkish Fed rhetoric, and surging bond yields last week. Can it keep this streak up?
There are no major reports due from Uncle Sam this week, so it might be all about bonds and sentiment from here. Here’s what you should watch out for. Read more.
Rising oil prices and improving sentiment on NAFTA (Sorry, I meant USMCA!) lifted the Loonie for the most part of the week before the commodity slumped and Canada printed downbeat jobs data.
Canada’s economic schedule is clear of any major catalysts this time, which leaves the oil-related currency to take cues from sentiment and Black Crack. Read more.
EUR & CHF
Concerns about Italy’s budget continued to sap demand for the shared currency last week while the franc seemed to be dragged lower by the invisible hand of the SNB.
Italy could keep hogging the euro’s spotlight this week in the absence of major euro zone releases while the franc might be pushed around by sentiment or intervention jitters. Read more.
Sterling was the king (or queen) of pips last week as EU leaders seemed to warm up to a special Brexit deal for the U.K.
The clock is ticking for an actual agreement to be struck, which means that all eyes and ears will still be on negotiations and remarks from top officials this week. Read more.
Despite the jump in U.S. bond yields that typically hurt the lower-yielding yen, the Japanese currency was still able to take a piece of the risk aversion pie lately.
The same could be the case in the days ahead as economic data will be light, leaving yen pairs to be pushed around by market sentiment and bond yields again. Read more.
The Aussie wasn’t able to keep up its positive start to the previous week as it caved to risk-off flows, a downbeat RBA tone, and easing expectations in China.
And now that the Chinese central bank has cut its RRR in a likely reaction to trade troubles, the Australian currency isn’t exactly off to the best of starts this time. Can it still recover, though? Read more.
The Kiwi found itself at the bottom of the forex pile, weighed down by risk aversion and dollar strength. Keep in mind that the RBNZ isn’t feeling very optimistic either, and a leading business indicator signaled that further weakness could be seen.
The lack of major data from New Zealand this week could keep the higher-yielding currency sensitive to risk flows and dollar direction. Read more.
Charts to Watch:
First up is this short-term reversal pattern on USD/JPY that looks ready to for confirmation. Price is already testing the head and shoulders neckline at 113.60 and a break lower could lead to a drop of at least a hundred pips, which is the same height as the chart pattern. Be careful since stochastic is just pulling up of oversold conditions, though.
Anyone gutsy enough to take a countertrend play? AUD/USD is already approaching the bottom of its descending channel on the daily time frame, and stochastic is suggesting that it’s high time for a bounce. Note that this channel has been holdin’ like a boss since April, so there may be some bulls waiting at support and ready to push price back to the top around the .7100 levels.
Saved the best for last! I’m digging this channel-ception on the daily time frame of USD/CAD as the pair just recently bounced off the longer-term support and looks prime for a test of the short-term resistance around 1.3100. A break past that could take the pair all the way up to the larger channel’s resistance around 1.3500, and stochastic seems to be suggesting that buyers are revving up.