The Week That Was…
The main theme in Forex markets this week was broad Dollar weakness and China-led volatility. Following the near miss in last week’s NFP’s players began pricing out September rate-hike expectations seeing an unwinding in bullish USD positions across the board. Retail Sales data was unable to provide sustained upside despite a positive print as markets panicked in the wake of the sharp Chinese currency devaluation, which again was seen as a deterrent to a September rate hike.
Minutes from the July 28th/29th FOMC meeting will be released last week, alongside CPI data which will provide the next phase of action in the closing weeks of August.
- USD Weakened further as the post NFP sell-off from last week continued this week as more players begin to discount a September lift-off. Retail sales were unable to provide lasting bullish impetus.
- EUR A stronger week for the single currency which benefited 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 a retest of 1.11 support despite the weaker than expected EZ GDP print.
- GBP Ground higher over the 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 this week.
- JPY Safe haven demand on the back of the sell-off in Chinese Yuan supported the Japanese currency this week though defensiveness receded as the sell-off slowed down with USDJPY back below the 1124.50 resistance.
- AUD Traded sharply lower this week on Chinese volatility before experiencing a full reversal after Chinese officials stepped in to stem the crisis. Price currently treading water, still within last week’s range.
- 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.
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