The Week That Was
Ultimately a week of rotation in Forex markets as most majors stayed within recent ranges as EURUSD bounced off the May low and USDJPY retreated from the June high, with GBPUSD selling off on weaker domestic data. USDCAD & AUDUSD were the exceptions as both the CAD & AUD weakened significantly with players positioning for USD length in these pairs.
Next week is an important week for markets with the FOMC meeting in in sight. Calm before the storm?
- USD Began the week above the June high on the back of stronger flows following recent hawkish comments by Fed Chair Yellen only to fall as the week progressed. Better existing home sales data on Wednesday spurred some Dollar buying but ultimately USD traded lower despite better Jobless claims data, finishing the week well inside the June high. Next week’s FOMC meeting will be of key importance.
- EUR A positive week for the single currency in the midst of Greek concerns having passed as Greek Parliament approved the bail-out bill. EURUSD managed to hold the 1.08 support level at May lows with Hedge funds strong buyers of Euro off that support, though price was unable to make it back up to the pivotal 1.1050s area. Ultimately, price is still rotating within the last two month’s range.
- GBP The positive momentum of the last two weeks gave way as poor retail sales slapped GBP down. Comments from the BOE have been increasingly hawkish but current data not looking too supportive, with this uncertainty reflected in GBPUSD’s grind lower.
- JPY A stronger week for the Japanese currency which saw USDJPY rebound from the resistance level at June highs. BOJ minutes release showed members were in agreement that inflation is likley to improve and BoJ head Kuroda dismissed the likelihood of yet more quantatative easing. Despite this however, many players are gearing for BOJ to ease further in October given the weak fundamental picture in Japan.
- AUD Another soft weak for the Australian currency as poor CPI data drove the currency lower against broad Dollar strength with further declining copper and iron ore prices weighing also. RBA minutes release revealed RBA Governor Stevens’ admission that a further rate cut is an option.
- CAD Yet more weakness for the Canadian currency following the BOC’s rate cut last week, taking USDCAD up through 2009 highs with players adopting the pair as a good expression of USD strength ahead of the FOMC meeting next week. Canadian GDP will be closely watched next week.