Week Ahead: Trading Outlook

Key Events This Week: July 27th – 31st

USD: Durable Goods – Monday, Consumer Confidence – Tuesday, FOMC Rate Decision – Wednesday, GDP Thursday
EUR: German Unemployment Change & Rate, German CPI – Thursday, EuroZone CPI – Friday
GBP: GDP – Tuesday
JPY: CPI – Thursday
CAD: GDP – Friday

USD Still lacking conviction and direction, the Greenback is in the firing line once again this week with a raft of key data this headlined by the FOMC rate decision. CME Fed Funds Futures give an implied probability of 0% for a lift off at this meeting and with no press conference following the meeting traders will be closely monitoring the statement for an update on the Fed’s position.

EUR Strengthened last week on the back of subsiding concerns over Greece, bouncing off the key 1.08 support level but failing to make it back up to the pivotal 1.1050 zone. Key German data on Thursday and EuroZone CPI the main data points though the heavy US data set and FOMC will decide which way EURUSD heads from this range.

GBP The positive momentum of the last two weeks gave way as poor retail sales slapped GBP down. Comments from the BOE have been increasingly hawkish but current data not looking too supportive, with this uncertainty reflected in GBPUSD’s grind lower. Recent data don’t leave much hope for an encouraging GDP print on Tuesday, with the potential for GBP to trade lower.

JPY A stronger week for the Japanese currency last week which saw USDJPY rebound from the resistance level at June highs. BOJ minutes release showed members were in agreement that inflation is likely to improve and BoJ head Kuroda dismissed the likelihood of yet more quantitative easing. Despite this however, many players are gearing for BOJ to ease further in October given the weak fundamental picture in Japan. CPI released on Thursday will draw big attention given last week’s comments.

AUD Another soft week for the Australian currency last week as poor CPI data drove the currency lower against broad Dollar strength with further declining copper and iron ore prices weighing also. RBA minutes release revealed RBA Governor Stevens’ admission that a further rate cut is an option and positive US data and indeed a hawkish FOMC statement will see AUDUSD trading outlook skewed further to the downside.

CAD Yet more weakness for the Canadian currency following the BOC’s rate cut the week before last, taking USDCAD up through 2009 highs with players adopting the pair as a good expression of USD strength ahead of the FOMC meeting next week. Canadian GDP will be closely watched as a signal of just how bad the economic situation is in Canada with further rate cuts still a possibility.

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