Week Ahead: Trading Outlook

Key Events This Week: September 7th – 11th

GBP: NIESR GDP Estimate – Wednesday BOE Rate decision & Monetary Policy statement – Thursday
EUR: GDP – Tuesday
CAD: BOC Rate Decision & Statement – Wednesday
NZD: RBNZ Rate Decision & Statement – Wednesday
AUD:  Unemployment Rate – Thursday
CHF: Unemployment Rate – Tuesday

Overview

  • USD Ultimately driven higher last week by the effects of the ECB’s QE increase. Positioning ahead of Friday’s jobs report also saw USD better bid and although the jobs report saw a big miss arriving at 170k vs 220k expected, USD seemed well supported as investors were undeterred by the miss. No key US data this week should see USD range-bound with two weeks to go until the FOMC meeting.
  • EUR The announcement of an increase in the ECB’s asset purchase program and willingness to step in against continued EUR strength saw price decline sharply against a continued backdrop of carry trade unwinding last week. GDP on Tuesday will be closely watched given the ECB’s latest announcement and will set the tone for the EUR’s trading outlook this week.
  • GBP Sterling traded lower last week as weak August PMI figures softened trader’s expectations of a UK rate hike and saw further retracement of bullish positions. BOE this week is now main focus though expectations have softened given recent data disappointment. GBPUSD has fallen through the 50% retracement of 2015 lows to highs and next key support is at 1.5086, the 61.8% retracement and May low.
  • JPY Safe haven flow has continued to support the Japanese currency amidst increasing global slow down fears. Domestic data flow has had little impact against the broader issue of the timing of a Fed lift off date and Chinese data concerns. Comments made by BOJ’s Kiucki that the BOJ will be unable to meet it’s inflation target and should taper it’s asset purchases seemed largely ignored by markets. No key US or domestic data should leave JPY trading off risk-based flows.
  • AUD Last week was a heavy week for the Australian currency which broke fresh 2015 lows having recently broken down through the 15 year ascending trend line. Australian Q2 GDP came in below market expectations at 0.2% q/q. and retail sales also fell below expectations printing the first lower figure in 14 months. The RBA maintained rates this month and stuck to a data-dependent policy stance believing current policy to be accommodative enough for now.  Unemployment rate on Thursday will be a key glimpse into the shape of the Australian economy and a bad print here could see further frontrunning by those expecting another RBA cut.
  • CAD The Canadian currency was weaker again last week despite the stronger-than-expected Canadian Q2 GDP data, the core drivers of risk sentiment and oil prices continued to keep CAD hemmed in with the Canadian unemployment rate increasing adding further concern for the state of the Canadian economy. BOC rate decision on Wednesday presents a key risk event with the BOC’s last rate decision statement leaving plenty of scope for further easing.
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