The Week That Was…
A relatively contained week with the majors confined to their month-long ranges. Uncertainty over Greek still hanging heavily over EUR with erratic headlines driving reactionary price action. A more hawkish than expected UK Inflation report spurred some strength in cable but not enough to make new monthly highs. The key focus point of the week, the Fed’s minutes release proved a lacklustre affair and Fed dovishness didn’t rock the boat for currency traders. All eyes turn ahead to the Humphrey-Hawkins testimony which has the ability to prove more significant in terms of providing rate guidance.
- USD A dovish Fed minutes release has tempered traders’ expectations of rate hike towards the front of the June – September range. However should next week’s Humphrey-Hawkins testimony come in Dovish this is unlikley to undermins USD further. Dollar didn’t suffer much on the back of the dovish minutes release and medium-longer term USD bullishness remains intact.
- EUR Once again, the headline risk surrounding the Greece situation remains extremely high and whilst negotiations remain tentative, continued volatility is to be expected. The ECB is yet to begin QE and although growth in Europe has increased slightly, it is still much less robust than the growth seen in the US. The context of this weaker growth and uncertainty surrounding Greece is likely to keep the single currency pressured.
- JPY A mixed week, having started softly, JPY regained some ground on the dovish Fed minutes release. Japanese yields have been rising this week mitigating the deisre of Japanese investors to place money abroad which should drive near term JPY strength.
- GBP A flatter week for the UK currency. Having gained some ground on the back of a more Hawkish than anticipated UK Inflation report, GBP then conceeded it’s gains heading into the week’s end. GBP could benefit from investors viewing the UK gilt market more favourably than euro area bonds.
- CAD A mixed week as the USD chopped around the Fed minutes release. Oil prices continue to impact price action. Continued CAD bearishness is likley as the BoC is expected to continue it’s Dovish tone. Oil price will continue to threaten Canadian growth further impact the currency.
- AUD With no major data releases and holidays across several smaller Asian countries, range trading has been the name of the game. Despite a dovish Fed minutes release, AUD still struggled. A revised monetary policy outlook is expected to see AUD continue to struggle against the Dollar and with Greek negotiations still in the spotlight, range trading is expected to continue.
EURUSD: Short Term (1-3 Days): Neutral – 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
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