Forex - This week's five highlights


 11:00 (GMT) 14 Sep

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This week's five highlights:

Trade tensions still the bigger worry and ECB and BoE stick to the script ....

.... though markets more hopeful on agreements (for now!)

USD pushed lower - eventually - as US inflation misses

AUD jumps on employment, CAD supported by NAFTA hopes

This week's five highlights (0101-DSTC-C04)

Most of the excitement was concentrated at the end of the week, a combination of soft US inflation data and some less than feared downgrades to growth from the ECB seeing EUR/USD break out of the 1.1500/1.1650 range to eventually test 1.1720 resistance. No one expected any policy changes from either the ECB or BoE and they were not disappointed.

This week's five highlights (0101-DSTC-C02)

Focus over most of the week was on trade tensions with the US featuring both in regard to China trade and ongoing negotiations to renew agreements with Mexico and Canada. Overall the mood has probably lightened, equities managing gains over the week, and that helping keep the JPY under pressure. USD/JPY did have to batter at the 111.50 range top for some time before a quick look over 112 late Thursday/early Friday, that and the otherwise softer overall USD tone again giving EUR/JPY the more exciting ride as it topped out over 131 (a good step from the sub 125 seen in mid-August).

Data calendars were fairly lightweight but some releases managed to have an impact. The US saw both PPI and CPI fall short of expectation, the latter a major contributor to the step-up in price action. While on inflation Swedish CPI on Friday also fell short, this following some significant downward revisions to GDP seen earlier in the week and once again dashing the hopes of EUR/SEK shorts. The NOK had a better week, boosted by higher than expected CPI and GDP.

The UK saw stronger than expected wage data, while a slightly more optimistic tone from the EU side on Brexit also helped to lift GBP, this despite the UK government seemingly as divided as ever. For all that, we still await the much reported plan to topple PM May to take shape ....

Commodity currencies have generally had a better week, AUD/USD rescued from what was looking an inevitable look at .7000 by strong employment data, the bounce accelerated by the wider USD sell-off, though struggling over .7200. The CAD was supported by optimism on NAFTA talks (though there is still some way to go there), USD/CAD with a visit sub 1.3000. The NZD was mainly out of the limelight but AUD/NZD still contained by 1.08/1.10, if towards the upper end.

This week's five highlights (0101-DSTC-C03)

The CHF has maintained a firm overall tone despite the bounce from the recent dip under 1.12 for EUR/CHF, USD/CHF making a 5 month low. Sight deposit data again suggests no intervention by the SNB, while arguments that the currency is overvalued were undermined again by the data with substantial upward revisions to GDP.

Still to come:

This week's five highlights (0101-DSTC-C01)

The US does have some data due, retail sales and industrial production both featured but with no great weight for current FOMC thinking. We expect August retail sales to increase by 0.5% overall and ex-autos, with a 0.4% rise ex-autos and gasoline.

For Industrial Production we expect a 0.5% increase overall, but a subdued 0.1% for manufacturing.

Preliminary Michigan CSI for September is due later.


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