Week Ahead: Trading Outlook

Key Events This Week: September 28th – October 1st

USD: PCE – Monday, Consumer Confidence – Tuesday, ISM Manufacturing, Unemployment rate & Non Farm Payrolls – Friday
EUR: German CPI – Tuesday, German Unemployment rate, EZ CPI – Wednesday
CAD: GDP – Wednesday

Overview

  • USD Dollar strengthened last week as bulls were once again engaged following Fed Chair Yellen’s Hawkish comments on Thursday evening. Bulls will be cautious into the new week with price failing to close above the weekly high leaving a bearish Daily pin bar at the near term resistance level. A key week of data for the US Dollar should provide plenty of volatility kicking off with PCE data on Monday ( a key gauge of inflation for the Fed) with Non Farm Payrolls the headline data set on Friday.
  • EUR Ended the week in the middle of the range having recovered losses following hawkish comments from Fed chair Yellen. Although the ECB failed to deliver further stimulus at this month’s meeting, market participants are anticipating further easing in the very near future suggesting further downside. EZ CPI will be closely watched on Wednesday given the ECB’s concern over the inflationary environment.
  • GBP The Dovish FOMC has seen an unwinding of BOE rate-hike expectations seeing Sterling broadly lower last week. Comments made by the BOE on Friday highlighted the increased risk from global elements seeing further GBP weakness. An absence of Tier One domestic data will leave GBP trading off Dollar flows amidst key US data.
  • JPY CPI data came in better than expected last week though JPY upside was largely ignored in the wake of of Fed Chair Yellen’s Hawkish comments.The Yen continues to strengthen amid falling equity prices as investors repatriate capital. US data will be key to the Yen’s trading outlook this week.
  • AUD The Australian Dollar came under sustained pressure last week amid stronger USD. Retail traders were heavily offside as AUD continued lower as commodity markets continued their decline. A monthly close below the 15 year ascending trend-line is now looking likely, signalling further downside.
  • CAD Despite Oil remaining range bound last week, the Canadian Dollar weakened further with Canadian elections less than a month away prompting uncertainty. Yellen’s Hawkishness should spur further Canadian Dollar weakness from here. Canadian GDP midweek will be closely watched by traders looking to anticipate the BOC’s next move.

 

Posted in Forex Analysis, tagged with on