The trend is your friend in trading this week. In FX, the Japanese yen has been the outright leader with the antipodean currencies struggling. The former owes to exhaustion on the part of buyers but also arguably some anticipation flows ahead of the BOJ next week. USD/JPY has taken quite the tumble since Japan intervened on 11-12 July. The pair is down well over 900 pips since the highs earlier this month.
As for the aussie and kiwi, they had been weighed down by pressure on the Chinese yuan. But Beijing looks to be putting a lid on USD/CNY for now, just under the 7.28 mark. The pair has now dropped back to 7.25 but domestic equities are still not as confident despite the many easing measures announced this week. The latest one coming today here.
Besides that, a more dour risk mood overall is also weighing on commodity currencies in general. USD/CAD also benefited from the rate cut by the Bank of Canada overnight here. The pair is now eyeing its April highs of 1.3838-46 as it pushes above the 1.3800 mark since yesterday.
In the equities space, US futures are looking calmer for now but it is still early in the day. That said, the S&P 500 could yet lean on trendline support here for a bit of a reprieve after the heavy selling in the last two weeks.
Looking to European trading today, there won’t be much to really shake things up. The German Ifo business survey is the main highlight but it shouldn’t offer anything new to the outlook. The focus in Europe now is on inflation data, to confirm whether or not the ECB is on course for a rate cut in September.
0645 GMT – France July business confidence
0800 GMT – Eurozone June M3 money supply
0800 GMT – Germany July Ifo business climate index
1000 GMT – UK July CBI trends total orders
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
