The Forex Week In Review

The Week That Was…

The majority of this week saw rotation in lower ranges in the majors as without any meaningful data catalyst the USD continued to consolidate at highs. The meat of the week saw significant rumours regarding the Japanese Sales tax being deferred and the potential of snap elections taking place in Japan, the political uncertainty propelled the USDJPY to seven year highs. Today’s Retail Sales data came in better than expected and is supporting the USD in to the close of the week.

Next week brings the FOMC back into focus with the meeting minutes release, coupled with the potential for more details regarding Abenomics. It is  these two issues that will likely set the tone for the next phase of USD direction.

Not necessarily a major market mover but worth keeping one eye on the G20 meetings this weekend as geopolitcal tensions around the Russia and Ukraine crisis remain elevated.

  • USD a mixed week, unable to secure the next leg up without a decent data catalyst, this afternoons retail sales is proving a decent platform to keep the USD bid into next week’s FOMC meeting minutes release.
  • EUR started the week under pressure and remains in the lower end of the recent price range this afternoon. Germany and France narrowly avoided recession level GDP prints this morning, GDP across the Eurozone is modest at best, highlighting the challenges ahead. The ECB remain on the radar with the policy divergence story firmly in tact for now.
  • GBP consolidated early in the week, ahead of the BOE’ Quarterly Inflation report which pulled the rug from under the Cable bid and with construction output remaining soft Cable printed fresh lows this afternoon.
  • JPY felt the full force of the USD bid, rumours regarding the Sales Tax being deferred and the potential of snap elections in Japan saw the USD soar to fresh seven year highs against the beleaguered JPY, left stranded by fiscal policy and political uncertainty.
  • CAD interestingly has failed to reach a fresh low since November 5th, even as oil   prices have fallen to fresh lows; leaving CAD vulnerable.  Next week the most important  developments for CAD will be domestic data, oil prices and the broad USD move.
  • AUD data was mostly positive. Oct NAB business conditions rebounded to a six
    year high, amid a lower AUD, albeit business confidence edged lower. RBA’s Kent speech reiterated below trend growth forecasts, while not ruling out FX intervention. All eyes on the RBA minutes next week.

Key Views

  • EURUSD Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
  • GBPUSD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
  • USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
  • USDCAD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
  • AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

Make Sure you tune in on Sunday evening for our Weekly Forex Outlook & COT analysis.

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