The Week That Was…
Volatility and headline driven trading flows persisted this week in global currency markets, with growing uncertainty around Greece’s position in the EU following the announcement that Greek debt will no longer be accepted as collateral. USD saw early strength in the week as US yields continued to push higher on the back of last week’s Strong Payroll number, but this strength subsided into the second half of the week on disappointing US retail sales.
Weak data out of China and falling commodity prices added to volatility with unsourced comments surrounding the BOJ future stimulus plans contributing also.
- USD Last weeks strong Payroll figures and growing political uncertainty in the EZ helped to support the Dollar early in the week though worse-than-expected US retails sales saw price soften. Rising US yields continue to support the greenback and with EZ political risk having slightly diminished, markets await comments from Fed’s Yellen later this month
- EUR Saw choppy price action this week amidst conflicting reports surrounding a resolution to the situation with Greece. Although ending down on the week the single currency headed higher from year to date lows on reports of Greece being given an extension of the emergency liquidity assistance. The ongoing uncertainty surrounding Greece and it’s position in the EuroZone is likely to continue to weigh on price over the coming weeks and with negotiations appearing far from smooth, price action is likely to remain choppy and reactive.
- GBP Registered a positive week on the back of a hawkish quarterly inflation report and BoE Governor Carney’s subsequent comments. With the Inflation forecast raised, reserve manager inflows are likely to continue to strengthen the currency, which has now broken out of the downtrend running from 2014 highs.
- JPY saw a sharp rebound this week following unsourced comments that the BoJ is reluctant to expand monetary easing. This move was further fuelled by the disappointing US retail sales data. Markets await Comments from BoJ’s Kuroda next week with a denial of the reports likely to revive yen selling.
- AUD Another bearish week for the currency following the unexpected cutting of interest rates by the RBA last week. Week data out of China added downside pressure as commodity prices fell but the pair managed to rebound somewhat on the back of disappointing US retail sales, the rebound continued on the back of a speech given by RBA governor Stevens who was found to sound less dovish than expected.
- CAD Saw a choppy week on the back of volatility in crude prices. Disappointing US retail sales saw CAD regain some of the ground it conceded earlier in the week but USD bullishness looks likely to continue from these levels. The BoC is likely to continue its dovish tone and with oil prices threatening Canadian growth, further CAD downside is expected to materialize
- EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
- GBPUSD: Short Term (1-3 Days): Bullish -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): Neutral – Medium Term (1-3 Weeks) Bullish
- AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
Make sure you tune in Monday for our Weekly Forex Outlook & COT analysis & be sure to check out the LFX Traders Forum to follow our intraday trading strategies