Weekly USD/JPY Outlook: 2017, July 16 - July 23 (based on the article)
Dollar/yen attempted to move above the cycle high but was rejected. On its way down, it lost the uptrend line of support. The drivers were both political and monetary.
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ECB Meeting on Thursday.
Thomas Lawson, 2017.07.15 16:15
Weekly Fundamental Forecast for Dollar Index (based on the article)
Dollar Index - "Next week brings no high-impact data out of the United States, and on Saturday the Federal Reserve enters the ‘quiet period’ before their next rate decision on July 26th. The bigger market-wide events are rate decisions out of Europe and Japan along with an updated inflation print out of the U.K.; and this will likely be where the bulk of market participants’ attention remains. From what we’ve seen of recent – both the ECB and the BoJ have made efforts to talk-down their currencies and, if they’re effective next week, this could bring a modicum of strength to the U.S. Dollar that would essentially amount to a retracement of the ‘bigger picture’ bearish trend."
Weekly Fundamental Forecast for GBP/USD (based on the article)
GBP/USD - "Traders in the British Pound will be focused on Tuesday’s UK inflation data for June in the week ahead. That would certainly strengthen the position of the doves on the Bank of England’s monetary policy committee, who only just outnumbered the hawks pressing for an interest-rate increase at their last meeting. With news likely too in the coming week of stronger UK retail sales, the impact on the British Pound could well be negative."
Weekly Fundamental Forecast for USD/JPY (based on the article)
USD/JPY - "On balance, this means the BOJ may need to resort to heavier artillery. Recently disappointing economic news-flow may have defused the need an immediate shake-up of the policy mix, deflating the risk-on swell a bit dialing back upward pressure on bond yields. Signaling the clear prospect of stimulus expansion seems necessary however. In fact, a status-quo announcement may well result in unhelpful Yen gains."
Weekly Fundamental Forecast for AUD/USD (based on the article)
AUD/USD - "The first big risk event will come Monday with the release of China’s Gross Domestic Product numbers for the second quarter. The markets are looking for a chunky 6.8% annualized gain and it will be interesting indeed to see how the actual result affects the Aussie. The initial reaction will probably mirror the strength or weakness of the number, but the extent to which this price action holds will show us the way in which China is driving the currency now."
Weekly Fundamental Forecast for USD/CAD (based on the article)
USD/CAD - "With the Canadian economy now projected to grow an annualized 2.8% in 2017, the BoC may layout a more detailed exit strategy the as ‘output gap is now projected to close around the end of 2017, earlier than the Bank anticipated in its April Monetary Policy Report (MPR).’ The material shift in central bank rhetoric suggests Governor Poloz and Co. may even consider a series of rate-hikes especially as ‘the factors behind soft inflation appear to be mostly temporary.’"
Weekly Fundamental Forecast for USD/CNH (based on the article)
USD/CNH - "At the same time, the risk of trade disputes with major counterparts remains elevated for China. The U.S.-China Comprehensive Economic Dialogue to take place on July 19th aims to avoid such conflicts and to develop a bilateral economic plan for the coming year. U.S.’s trade deficit with China is one of the issues that Trump administration focuses on. After the Trump-Xi summit in April, the two largest economies reached a 100-day trade deal, which was seen as the first step to resolve disagreements on trade. As China is still in the transition period from export-driven to domestic-consumption-driven, it will have to continue to rely on the global demand for a considerable amount of time. As a result, reaching an agreement yet not compromising too much will be a delicate dance for China to play in the meeting next week."
Weekly Fundamental Forecast for GOLD (XAU/USD) (based on the article)
XAU/USD - "The June Consumer Price Index (CPI) & Retail Sales figures came in shy of consensus estimates on Friday, fueling another sell-off in the dollar. The data comes on the back of this week’s semi-annual Humphrey Hawkins testimony before congress where Fed Chair Janet Yellen cited a more dovish outlook on monetary policy. The committee judged that “because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.” At the same time, Yellen left the door open for further easing measures should market conditions deteriorate."
Weekly Fundamental Forecast for Crude Oil (based on the article)
Crude Oil - "While Crude Oil rose this week to the tune of ~5%, there were other factors that caught the attention of investors like the surprisingly weak US CPI on Friday, which shows how difficult of a job the Fed has a head of themselves. It is important to note that a key component of inflation is energy, but we could may still be a respectable distance away from seeing crude put upside pressure on inflation measures."