The Forex Week In Review

Forex Week in Review: The Week That Was

An interesting week in Forex markets as we saw a reversal of some of the key themes of the recent Months, and the continuation of some others.

Despite the upside surprise in the NFPs last week, USD strength was unwound this week most notably against the JPY which befitted from comments by the BoJ’s Kuroda, that the yen was very week and unlikely to fall further. JPY was not the only beneficiary of verbal intervention from a Central Bank head, EUR too was supported after comments by the ECB’s Draghi did little to suggest that the recent rise in Bund yields (and subsequent rise in EUR) would recede in the near term.

Overall the picture remains that USD weakness seems here to stay for now, despite some recent data beats, momentum seems to have turned against the Greenback. All eyes are now fixed firmly on next week’s FOMC meeting.


  • USD Following last week’s explosive NFP beat we saw USD start the week rather disappointingly as positive momentum was unwound. The unemployment rate had missed and as such the data didn’t warrant the full engagement needed to push the Dollar higher from these levels. A retail sales beat on Thursday spurred some bullish action but strength was faded late in the day and again on Friday. The feeling here is that momentum is no longer on the side of USD bullishness. Recent data beats have not been enough to inspire a return to the March highs and for now USD is stuck in the middle of May’s trading range.
  • EUR Continued to rise this week as European yields dragged the single currency higher, supported also by the USD weakness we’ve seen. ECB’s President Mario Draghi’s comment on bond-market volatility, that “we should get used to periods of higher volatility” suggest that we could see European yields rise further. The situation in Greece poses a risk to EUR upside as the debt stricken country appears even closer to default. The key now will be which goes higher, European yields or US data?
  • GBP Enjoyed a smooth ride to the upside this week having once again found support around the post March FOMC high area. Currently stalled at a test of the key 1.55-5550 resistance it seems that GBP’s move this week was really just on the back of the USD unwind. Key data for the UK next week will set the direction from here.
    JPY Kuroda cleaned up the picture this week for those watching the key 125 level break in USDJPY. Comments surrounding the weakness of the Yen and the unlikelihood of it depreciating any further spurred a rather acute bout of JPY appreciation. Expectations around future monetary easing have subsided following these comments and JPY strength is likely to be a key theme over the next few weeks.
  • AUD Remained firmly within last week’s range despite two key events. Firstly the RBNZ cut New Zealand’s interest rate spurring a gap higher in AUD/NZD which saw AUD and secondly we saw an impressive upside surprise in the Employment change and a further decline in the Unemployment rate, however the composition of the employment change was mainly comprised of part-time employment and doesn’t signal confidence for the real strength of the Australian economy. Chinese growth continues to slow and CPI/PPI both missed this week. With iron ore exports continuing to fall and the RBA stating that further depreciation of the currency is “likely and necessary” the medium term picture appears bearish for the Australian currency.
  • CAD Oil rotated higher within it’s recent range this week so too taking the Canadian currency higher. Further support came from the USD’s weakness which set the tone for the week, seeing only a mild recovery in USDCAD following the US retail sales beat on Thursday. The key now for CAD will be where Oil heads from this now 7 week old range.

Key Views

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


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