The US Dollar ended as the hottest one last week but Friday’s fall after a solid non-farm payroll job numbers suggests that the rally is already losing momentum. The Euro ended as the second weakest, next to Aussie, but the late development in EURAUD suggests that the bias is not on Euro’s side. More importantly, developments in some crosses like EURCHF and EURCAD suggests that the market has a bearish bias in Euro crosses. In contrast, the late bounce back in Canadian Dollar opens up some bullish opportunities for the near term.
It is a quiet summer week for global markets this week as the only central bank meeting will be in Australia, where the Reserve Bank could take the first step towards exiting cheap money. In America, the minutes of the latest FOMC meeting will shed some light on when the Fed might take its own foot off the accelerator. Overall, the theme of monetary policy divergence will likely dominate the FX arena moving forward.
The most important economic data next week will be:
On Monday, US banks will be closed in observance of Independence Day but the OPEC-JMMC meetings will continue.
On Tuesday, the Australian Reserve Bank will report on the latest Rate Statement and Cash Rate. In the EU the German ZEW will report the economic sentiment and in the US the ISM Services PMI will be reported.
Wednesday, EU will release its Economic Forecasts. Later Canada will release its Ivey PMI and at the same time the US will release its JOLTS Job Openings. At night, the FOMC Meetings will be held which is expected to move markets.
On Thursday, G20 meetings will be held and are attended by finance ministers and central bankers from 20 industrialized nations. Later in the day the US will release its Unemployment claims.
Friday starts with UK’s and EU’s Industrial output numbers and then the Canadian Unemployment figures.
Major Currencies Performance and Signals
EUR/USD
EURUSD had a down week last week but still ranging between the 1.1900 and 1.1850 price channel. The pair is expected to have a bearish continued trend.
FORECAST: SELL
Resistance: 1.1900, 1.1950, 1.2000
Support: 1.1850, 1.1800, 1.1750
GBP/USD
As expected, the British pound moved lower last week, and we expect the same in the next week with the eyes at the US NFP This Friday.
FORECAST: SELL
Resistance: 1.3850, 1.3900, 1.3950
Support: 1.3800, 1.3750, 1.3700
AUD/USD
The Aussie edged lower to 0.7443 last week but quickly recovered again. Initial bias is turned neutral this week first. Another fall could still be seen, and break of 0.7443 will resume the whole corrective pattern from 0.8006.
FORECAST: NEUTRAL
Resistance: 0.7550, 0.7600, 0.7650,
Support: 0.7500, 0.7450, 0.7400
USD/JPY
USD/JPY after retreating from fresh YTD high consolidates near 111.00. Lower US Treasury yields undermine the demand for the US dollar. Yen remains on the sidelines as risk sentiment improves after strong US data.
FORECAST: BUY
Resistance: 111.50, 112.00, 112.50
Support: 111.00, 110.50, 110.00
USD/CAD
US dollar surrendered last week’s gains after NFP. WTI rises 1.2% to near three-year high. US Treasury rates drop after Friday’s payrolls. We expect a long-term consolidation below 1.2400.
FORECAST: NEUTRAL
Resistance: 1.2350, 1.2400, 1.2450
Support: 1.2300, 1.2250, 1.2200
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