Key Events This Week: August 17th – 21th
USD: CPI, FOMC Minutes Release – Wednesday, Manufacturing PMI – Friday
GBP: CPI – Tuesday
CAD: CPI – Friday
- USD Weakened further last week as the post NFP sell-off continued with more players beginning to discount a September lift-off. Retail sales were unable to provide lasting bullish impetus. Key focus this week will be CPI data and of course the minutes release from the July FOMC where traders will be paying close attention to the Fed’s assessment of the slow down in China given the devaluation shock we had last week and subsequent pricing out of a September lift-off.
- EUR Benefited last week from USD weakness, trading back up to test the key 1.12 resistance level which marked the high of the week. Price was supported on an initial retest of 1.11 support despite the weaker than expected EZ GDP print. Flows will be mostly driven by US data this week with no tier one domestic data.
- GBP Ground higher over last week despite weaker labour data, again benefiting from USD weakness. Price has made several attempts to break back above the ascending trendline from 2015 lows which has capped upside action last week. CPI data on Tuesday offers opportunity for further upside on a strong number whilst a weaker number will likely spur sharp unwinding of GBP longs given the recent BOE “super Thursday” arriving seemingly less hawkish than expected.
- JPY Safe haven demand on the back of the sell-off in Chinese Yuan supported the Japanese currency last week though defensiveness receded as the sell-off slowed down with USDJPY back below the 124.50 resistance. A miss on last night’s GDP print gives a softer tone to the trading outlook for the early part of the week before key US data.
- AUD Traded sharply lower last week on Chinese volatility before experiencing a full reversal after Chinese officials stepped in to stem the crisis. Price currently treading water, still within previous week’s range.RBA Board minutes release on Tuesday will be key domestic focus though not likely to offer any new perspectives as we have already had the August statement on Monetary Policy and various speeched have been made by key officials.
- CAD The Canadian currency performed better against the Dollar this week on the basis of broad USD weakness but remained soft elsewhere with global commodities still under pressure. USDCAD headed back down to the post July BOC Rate cut area which is expected to act as support. CPI data on Friday will be key domestic focus.