The Forex Week In Review

The Week That Was

The FOMC minutes release was the key focal point of the week and with its perceived Hawkishness strongly received, we saw USD soaring once more. EUR was crushed on carry trade demand and investor outflows and GBP too printed 58 month lows against the USD as election uncertainty weighed. JPY was supported on repatriation flows so too was the AUD as the hunt for yield made it a firm favourite for the week whilst CAD benefitted somewhat from the rebound in oil prices.

With US Retail Sales and CPI next week, there is plenty of room for volatility given the markets neurotic reaction to data now as players speculate on an imminent Fed rate hike.

 Overview

  • USD A much firmer week for the Dollar which was boosted on the back of a more Hawkish than expected FOMC Minutes release. Treasury yields gained this week on the inflow and USD was firmly supported across the board. Retails sales and CPI data next week are going to be crucial and we can expect much more strength to the upside on positibe numbers or a rotation lower on weaker numbers. With the Fed’s data dependant stance the main market focus, US data is expected to create higher voltaility in the markets
  • EUR A dreadful week for the single currency which was hammered on USD demand, and carry trade demand alike. Eurostoxx reached 7 year highs which saw the currency continue lower and issue surrounding Greece continue to weigh. Heading back to Yearly lows, the parity hunt continues.
  • GBP The battle weary UK currency continued lower this week, victim to USD demand. Uncertainity surrounding the UK elections continue to weigh and despite a better start to the week, driven by big M&A news, weak data on Friday saw the currency print new yearly lows against the USD.
  • JPY As japanese investors sold foreign securities in record amounts recently, repatriating the money into their native currency, JPY has had another positive week, except of course against the USD. A surging Nikkei has continued to support USDJPY which is making a run for yearly highs once more.
  • CAD Oil prices continue to drive the Candian currency at the moment within the Candian economy suffering the effects. BoC are in the spotlight now as markets expect them to acknowledge this issue in it’s monetary policy meeting next week, though no change to the interest rate is expected. A small beat in the jobless report buoyed the currency on Friday.
  • AUD Carry trade demand and a less Dovish than expected RBA gave the Aussie a boost this week and indeed has even held it up against the USD. Markets are still expecting further RBA easing and with higher US interest rates in the near future, AUD downtrend is expected to resume.

Key Views

USD Index Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

EURUSD Short Term (1-3 Days): Bearish – 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): Neutral – 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): Bearish – Medium Term (1-3 Weeks) Bearish

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