Week Ahead: Trading Outlook

Key Events This Week: June 29th – Jul 3rd

EUR: German CPI – Monday, German Unemployment Change& Rate, EuroZone CPI – Tuesday, Greek IMF Repayment Date
USD: Consumer Confidence – Tuesday, ISM Manufacturing – Wednesday, Non-Farm Payrolls , Unemployment Rate – Thursday
CAD: GDP – Tuesday

  • USD A big week ahead for USD with Non-Farm Payrolls and Unemployment Rate both released on Thursday. Following the recent dovish FOMC meeting markets have moved to pricing in a September-December rate hike and were encouraged by hawkish comments made from Fed’s Powell. The NFP’s present their usual volatility risk with a strong number and a decline in the unemployment rate supportive of Dollar buying. Latest COT data shows Net USD long positions increased 10.3% into June 23rd.
  • EUR The situation around Greece is becoming even more fraught with emergency weekend talks collapsing with no deal reached and the Greek PM choosing to call a national referendum next week. Ahead of this is Tuesday’s EUR 1.5bln repayment to the IMF and markets brace to see whether Greece default on this payment and if so, what the consequences are going to be? EUR moved lower last week but still trapped within a tight range as uncertainty stems flows.
  • GBP Recent improvements in UK data, specifically strong wage data are supporting GBP rate-hike expectations with markets pricing in a rate increases in the early part of next year. Comments from BOE’s Weale struck an even more hawkish tone. GBP is particularly strong among the crosses where the policy divergence is clearer than against USD.
  • JPY The deteriorating situation in Greece is likely to affect the risk-appetite of Japanese investors and see a flood of JGB buying, supporting JPY.
  • AUD The slump in Chinese equity markets on Friday along with the recent data weakness concerning Chinese growth, highlight the increasing risks to the Australian currency. Iron ore prices are expected to weaken further with increased supply over the coming months adding further pressure to the Aussie’s trading outlook.
  • CAD Canadian GDP is the key data for the week with the BOC recently making the decision to leave rates unchanged. A weak number could increase the chance, or market expectations of a cut leading to CAD weakness. Oil price remains a key driver and is expected to head lower taking the Canadian currency with it.

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