After two weeks of trading on light data releases, we will soon experience a busy week with the next FOMC meeting to be held this Thursday morning. The US Dollar has retreated in these recent two weeks – a correction of its 11-week climb. Having said that, the bull trend is not yet over and the retracement most probably was a short adjustment. Fundamentally, there will be a great chance of the Fed ending the QE3 this week, whilst European and Japanese policy makers may look to introduce more stimulus programs over the next two years. Also, the bets are on for a stronger Dollar by hedge funds and other large speculators are still increasing, implying the Dollar may soon be back to rally again.
Recent weak data showing Germany’s slowdown and record low inflation level places more pressure on the ECB to consider additional categories of assets for its purchase program, even though it has just started to purchasing covered bonds.
The outlook of commodity currencies is also bearish. The Kiwi Dollar has broken the upward channel and is heading to the month low of 0.77. The highest interest levels amongst Western nations have curbed the space of economic growth of this export-oriented country. The export data showed that New Zealand’s exports to China fell 30% year on year in the last month, which was the biggest decline since July 2005. This fact may cause the NZDUSD to fall to a lower level.
Led by a surging Japanese market, the Asian stock markets rallied on Friday. The Nikkei Stock Average pushed up 1% – the third large rise last week. The Shanghai Composite was flat at 2302, as domestic investors worry about new rounds of IPOs. The ASX 200 gained 0.54% to 5412. In European stock markets, the UK FTSE was down 0.47%, the German DAX lost 0.66% and the French CAC Index slid 0.69%. The US market rose on bright earnings, halting a four-week slide with the S&P 500 capping its best week since 2013. The S&P 500 rose 0.7% to 1965. The Dow once gained 0.76% to 16805, while the Nasdaq Composite Index edged up 0.69% to 4484.
On the data front, the German Ifo Business Climate will be out at 20:00 AEST and US Pending Home Sales is out at midnight.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.