The Week That Was…
The main story of the Forex week, was the same as last week, and the week before: Greece.
We began the week in the dying hours of negotiations between Greece & the ECB in what transpired to be the longest Euro-Summit on record, as finally a deal was agreed upon mid-morning Monday. The deal was then successfully passed before Greek parliament following scary scenes in Athens as protesters raged against the proposed austerity package. The deal has largely been criticized by market participants as simply kicking the can down the road and imposing measures more of a punitive nature than growth-inducing.
- USD – Performed strongly across the majors this week with the exception of GBPUSD. Fed Chair Yellen reiterated in live comments this week that the Fed remains on track to raise rates this year citing the need to move sooner rather than later, to facilitate a more gradual rate increase path. A big beat on Housing starts and building permits along with CPI in-line spurred Dollar strength on Friday.
- EUR – The agreement in Greece saw the Euro trade lower this week on the combination of higher European equities and lower yields with EURUSD now eyeing the 1.0818 May low as next support.
- GBP – A stronger week for the UK currency despite a flat CPI reading. Bulls were spurred by comments from Bank Of England Governor Mark Carney commented that a potential interest rate increase will be brought into focus around the turn of the year as lower oil prices are expected to feed through and increase inflation.
- JPY – No further stimulus was announced from the Bank Of Japan this week though the Central Bank did lower it’s growth forecast for the Japanese economy whilst still citing an anticipation for inflation to reach the Bank’s 2% target by September next year.
- AUD – A tough week for the Australian currency as commodity prices continued lower. Comments from the RBA’s Edwards regarding a necessary path lower for the Aussie weighed on price with AUDUSD printing fresh lows again this week in the wake of hawkish comments from Fed Chair Yellen.
- CAD – The game of “will they won’t they?” finally came to a close this week as the Bank Of Canada cut rates for the second time this year citing the damage to the economy suffered from the sharp decline in oil prices. USDCAD traded back to 2009 highs of 1.30