Currency Market Preview – July 17 to 23

Good Morning; a look at the Week Ahead.
After a strong surge last week largely brought on by USD weakness, the AUD has opened the week near a two-year high against the greenback. The AUD was spurred on against the USD amidst weak US CPI and retail sales figures that has possibly soured the chances of another interest rate rise later this year. During her two-day congressional testimony last week, Fed Chair Yellen also gave a relatively strong indication that there is now no rush to increase US interest rates.
As the US heads further into summer and holiday mode there is little data this week that can be expected to turn the greenback’s fortunes around at least in the immediate term. The AUD made positive ground each day last week as it nudged up and though the two-year high whilst also appearing to reverse the recent soft trend against the NZD.
Whilst it may be a quiet US data week ahead global markets will not need to wait long to set the tone for the coming week. Chinese Q2 GDP figures will be released Monday morning with market expectations ahead of the country’s official 6.5% target. Alongside GDP will be the release of retail sales and industrial production data and these measures are also both expected to be showing signs of positivity this month. Recent increases in Chinese imports helped drive the AUD’s strong performance last week with positive signs emerging about the state of the Chinese economy.
The minutes from this month’s RBA policy meeting will be released on Tuesday and as always will be scoured for signals of future moves. Jobs and unemployment data on Thursday will be the major local release for the week and a strong outcome following last month’s positive report could serve to underpin the AUD further.
New Zealand data this week is headlined by CPI on Tuesday with visitor arrivals and credit card spending also due for release on Friday. Global dairy auction results are also due midweek. With the election nudging ever closer all data will now likely be viewed through this lens.
The ECB will meet on Thursday for its policy meeting and as always the accompanying statement will be eagerly awaited. Recent suggestions that the ECB will be looking at ways to taper its accommodative settings will be brought to the forefront with ECB President Draghi’s press conference keenly awaited. CPI and consumer sentiment and confidence data will also be released in the eurozone  this week.
British data this week is highlighted by key inflation measures due for release on Tuesday. Talk in the UK has yet again returned to the prospect of interest rate rises and the fact that the BOE Monetary Policy Committee remains divided in regards to raising interest rates. Brexit concerns and posturing will also continue to be everpresent in dialogue this week emerging from the UK.
In Asia this week Chinese data noted above will be anxiously awaited whilst the Bank of Japan is also due to meet on Thursday in an otherwise quiet econoimic week.
Regards All.
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