There are no central bank decisions on this week’s agenda, but we do get several data releases that could well affect expectations surrounding monetary policy. The main events this week are likely to be the Eurozone’s preliminary CPIs. Japan’s Tokyo CPIs, and the US core PCE index. So, we will be looking at how EURUSD, GBPJPY and USDCAD may perform.
Eurozone CPIs -> EURUSD
On Friday, preliminary data from the Eurozone are forecast to show that inflation slowed further in June, something that could prompt market participants to somewhat scale back their hike bets and perhaps hurt the euro. However, with the ECB well signaling its intentions to raise rates further, traders are unlikely to bet on a full-scale reversal in the euro, especially if the US PCE data confirms expectations of only one more hike by the Fed. EURUSD pulled back recently, but it continues to trade above the uptrend line drawn from the low of September 28. So, any further declines could be seen as a corrective phase.
Tokyo CPIs -> GBPJPY
In Friday’s Asian session, the headline Tokyo CPI rate for June is forecast to have risen to 3.8% year-over-year from 3.2%, but the core one to have just ticked up to 3.3% from 3.2%. With the BoJ staying ultra-lose and signaling that it will patiently maintain current policy settings, such numbers are unlikely to raise massive expectations of a policy switch soon. Therefore, even if the yen gains at the time of the release, that would be temporary, and the currency is likely to stay in a downtrend, especially against the pound as the BoE is forecast to raise rates by another 120bps before taking the sidelines. GBPJPY recently rebounded from the round figure of 180.00 and may continue trending north, perhaps towards the 188.00 zone, which offered strong resistance back during the summer of 2015.
US core PCE index -> USDCAD
On Friday, the US core PCE index, the Fed’s favorite inflation metric, is due to be released and expectations point to an unchanged print of 4.7% y/y. That said, USDCAD will not only be affected by the US data this week, but also by the Canadian CPIs that are scheduled to be released on Tuesday. The pair is trading below 1.3230, which is the lower bound of the sideways range that’s been containing the price action since September. However, for the outlook to turn overly bearish, a break below the low of September 13 at 1.2955 may be needed.
There are no central bank decisions on this week’s agenda, but we do get several data releases that could well affect expectations surrounding monetary policy. The main events this week are likely to be the Eurozone’s preliminary CPIs. Japan’s Tokyo CPIs, and the US core PCE index. So, we will be looking at how EURUSD, GBPJPY and USDCAD may perform.
Eurozone CPIs -> EURUSD
On Friday, preliminary data from the Eurozone are forecast to show that inflation slowed further in June, something that could prompt market participants to somewhat scale back their hike bets and perhaps hurt the euro. However, with the ECB well signaling its intentions to raise rates further, traders are unlikely to bet on a full-scale reversal in the euro, especially if the US PCE data confirms expectations of only one more hike by the Fed. EURUSD pulled back recently, but it continues to trade above the uptrend line drawn from the low of September 28. So, any further declines could be seen as a corrective phase.
Tokyo CPIs -> GBPJPY
In Friday’s Asian session, the headline Tokyo CPI rate for June is forecast to have risen to 3.8% year-over-year from 3.2%, but the core one to have just ticked up to 3.3% from 3.2%. With the BoJ staying ultra-lose and signaling that it will patiently maintain current policy settings, such numbers are unlikely to raise massive expectations of a policy switch soon. Therefore, even if the yen gains at the time of the release, that would be temporary, and the currency is likely to stay in a downtrend, especially against the pound as the BoE is forecast to raise rates by another 120bps before taking the sidelines. GBPJPY recently rebounded from the round figure of 180.00 and may continue trending north, perhaps towards the 188.00 zone, which offered strong resistance back during the summer of 2015.
US core PCE index -> USDCAD
On Friday, the US core PCE index, the Fed’s favorite inflation metric, is due to be released and expectations point to an unchanged print of 4.7% y/y. That said, USDCAD will not only be affected by the US data this week, but also by the Canadian CPIs that are scheduled to be released on Tuesday. The pair is trading below 1.3230, which is the lower bound of the sideways range that’s been containing the price action since September. However, for the outlook to turn overly bearish, a break below the low of September 13 at 1.2955 may be needed.
Related Posts: