Major Currencies Overview
The Greenback managed to shake off less hawkish remarks from Fed head Powell as it took advantage of euro weakness and closed out the week as a net winner.
It’s NFP week, fellas! This suggests that traders could keep close tabs on leading jobs indicators in the days ahead to gauge if jobs growth can keep up its pace. Read more.
Resurfacing NAFTA-related jitters weighed on the Loonie steadily for the week, and it didn’t help that crude oil was still in the red zone.
So far, the Loonie is off to a running start but the same trade-related themes could play out ahead of Canada’s jobs release on Friday. Read more.
EUR & CHF
The euro had a mixed run for the most part of the week as market catalysts pushed its counterparts around. Meanwhile, the franc struggled to follow its European buddy as risk-off flows returned on some days.
More updates from Italy could continue to influence the shared currency’s price action, but do keep an eye out for dollar behavior since the euro has been reacting to this, too. Read more.
Brexit continues to be the main theme for sterling price action, and the latest round of updates haven’t been so upbeat. For one, BOE head Carney painted a grim picture of a “no deal” post-Brexit world while U.K. PM May scrambles to get support for the transition agreement.
The spotlight would likely be on these developments in the days ahead since there are no major economic reports to distract pound traders. Read more.
The Japanese yen just couldn’t shake off risk-on vibes that came in play when Powell suggested that borrowing costs could pause from their climb.
The lack of top-tier events in Japan’s economic calendar for the week could keep the lower-yielding yen sensitive to risk appetite and global bond yields this week. Read more.
Not even rising concerns on trade tensions leading up to the G20 Summit were enough to dampen the Aussie’s spirits last week as it took advantage of risk-on flows after Powell’s speech.
A huge sigh of relief after the Trump-Xi meeting boosted the Aussie to gap higher over the weekend, but there are still a number of major Aussie event risks on deck. Read more.
After a dismal performance the other week, the Kiwi made quite the comeback as it landed in the top spot on account of risk appetite.
It’s another empty economic calendar for New Zealand this time, so the Kiwi could be hoping to catch more gains if risk-taking extends its stay. A big change in Mr. Market’s mood, on the other hand, could drag it back down to the bottom. Read more.
Charts to Watch:
First up is this update on the USD/CAD ascending channel that’s been holding since October. Price looks ready for yet another test of the channel bottom thanks to the weekend gap, and the notion that all gaps get filled could lead to a bounce to the middle again. Stochastic is already dipping into the oversold region to indicate that buyer might take over soon.
If you’re a hardcore Loonie bull, you might like this EUR/CAD reversal setup better. The pair looks prime for a test of the double top neckline, and a break lower could lead to a slide that’s at least the same height as the chart pattern.
Be careful, though, since stochastic is already indicating oversold conditions or that sellers are feeling exhausted. Turning back up could lead to another climb to the tops around the 1.5150 minor psychological handle.
If you’re the type to just go with the flow, this short-term descending channel on EUR/CHF could be worth playing. The pair might be in for another test of resistance as stochastic pulls up. Soon enough, it might start to fill the weekend gap, possibly making its way back down the swing low around 1.1250 or the channel bottom.