Weekly Outlook – USDCAD, Yellen Testimony in focus
- FX major markets saw the US Dollar recover some of the lost ground on back of the somewhat hawkish FOMC minutes and a strong labor market report (although wage inflation remains subdued). The Euro fell slightly, but net longs are improving according to CFTC data, where EUR net longs have increased in 10 out of 11 recent weeks, so bullish pressure remains intact. Sterling remained steady despite deteriorating macro data with Cable down 1% last week. JPY remained on the offer with USDJPY recording its fourth weekly gain in a row, breaking above 114 on Monday with resistance at the 114.40-area.
- Equity markets in Europe and US have generally held up well despite the recent hawkish tone from the central banks. Bund yields printed year highs last week and US 10yr treasuries are also on the bid. Asia is in negative with the MSCI AP index down 1% in July.
- In precious metals, gold broke trend support and now sees support at 1195-area. Silver on the offer as well, selling off heavily on Friday with bids seen below the 15-mark. Oil was rejected at the 200-DMA last week and has been on the offer since, currently sub-44.
- We expect this week to start off with little activity ahead of Wednesday, where the Fed Chair Yellen will commence her 2-day testimony in Washington. Ahead of the key US inflation data on Friday, we believe the market will look for any hints about the future path of the monetary policy in the US, which also is subject to the fiscal policy carried out by the US administration.
- CAD-pairs will be in focus on Wednesday afternoon, where the Bank of Canada will be releasing interest rates. The analyst community is split whether or not the BoC will do a hike, so we could a pickup in volatility around the release. In a Reuters poll, 13 out of 30 analysts are expecting a hike to 0.75%.
Read the full overview here! 20170710 – weekly
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