Major Currencies Overview
Even with strong counter currency influences and quick changes in overall sentiment, the Greenback still managed to close the previous week as a net winner.
This time, the focus could be on the September NFP report and the leading indicators that hint at the likely outcome. Oh, and another set of Fed officials are due to give speeches throughout the week, too! Read more.
An improvement in risk sentiment buoyed the Loonie higher against most of its peers, except against the Kiwi, despite a data-light week for Canada.
Canada’s monthly GDP and trade balance are both lined up this time, but Loonie price action could keep taking cues from sentiment and crude oil prices. Read more.
EUR & CHF
The shared currency spent the week mostly in the red as industry PMIs signaled that the worst ain’t over for the region. Meanwhile the franc saw choppy price action on changing sentiment.
This time, the flash CPI readings are lined up from the euro zone while Switzerland has its retail sales, manufacturing PMI, and CPI all up for release. Read more.
Sterling took major hits last week as the U.K. Supreme Court ruled that the prorogation was unlawful, yet PM Johnson doesn’t seem to be backing down from a “no deal” scenario.
Industry PMI readings are on this week’s docket, but it’s likely that most pound pairs will still be pushed around by Brexit-related developments. Read more.
Mixed inflation numbers and BOJ easing speculations combined forces to drag the lower-yielding yen to negative territory last week.
Jobs data and consumer confidence figures are up for release next, along with the quarterly Tankan reports that serve as leading indicators for economic performance. Read more.
After a strong start, the Aussie’s performance wound up mixed as a bag of M&Ms by the end of the week as RBA rate cut expectations came in play.
We’ll hear from the central bank itself this week as RBA policymakers gear up for their monetary policy decision. Expectations are for another 0.25% interest rate cut. Read more.
The Kiwi was the big winner for the week as its positive momentum picked up early on and got another boost from improving risk sentiment.
There’s not much in the way of top-tier data from New Zealand this week, which could keep the higher-yielding commodity currency sensitive to risk flows and trade-related updates. Read more.
Charts to Watch:
Bounce or break? EUR/GBP is trending lower inside a descending channel visible on the 4-hour time frame, with its lower highs and lower lows. Price is currently testing the channel resistance, deciding whether to continue to the drop or go for a reversal.
Stochastic seems to be suggesting that sellers could still take over. The oscillator is already in the overbought region to reflect exhaustion among buyers, and turning lower could confirm that bearish pressure is picking up. In that case, the pair could revisit the mid-channel area of interest or the channel support next.
Is this a reversal pattern I’m seeing on the 4-hour chart of USD/JPY? It looks like a sketchy inverted head and shoulders pattern to me!
A break past the neckline around the 108.50 minor psychological mark could set off a climb that’s at least the same height as the formation, which spans roughly 300 pips. However, stochastic looks ready to turn south after recently hitting the overbought region, indicating that bears are ready to return.
One more trend situation right here! This could be a short-term momentum play as EUR/USD is just breaking below the mid-channel area of interest to confirm that bearish pressure is picking up.
It could also be a counter trend opportunity as price tests the bottom of the channel around the 1.0800 handle and stochastic continues to head north to suggest that buyers are getting the upper hand.