The Week Ahead: Trading Outlook

Key Events This Week: April 20th – 25th

NZD: CPI, Sunday Night
EUR: German ZEW, Tuesday
AUD: CPI, Wednesday
USD: Durable Goods, Friday

Overview

USD Index Short Term (1-3 Days): Neutral Medium Term (1-3 Weeks) Bullish

Data weakness set the tone of last week for the Dollar which saw some further unwinding. The data dependant stance of the Fed negates any reason for USD bullishness until this data soft-patch comes to an end. Growth differentials are still supportive of USD trading outlook but many players are playing the wait and see game now

EURUSD Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

Mario Draghi reiterated his commitment to running the ECB’s QE program through to September 2016. Low interest rates and the accommodative monetary policy have made EUR a firm funding currency favourite. As political tension stemming from Greece continue, EUR should remain pressured.

USDJPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

Price remains trapped in the near term due to a strange dichotomy currently experienced. Japanese investors became the largest holders of USTs outside of the US but simultaneously foreign investors have flooded Japanese markets. JPY does remain strong on the crosses however.

GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

A much stronger week last week for the UK currency which has benefited greatly from the USD unwind. This week’s CPI print showed that the UK has not in fact dipped into deflation but downside risks remain. The forthcoming BoE minutes releases is likely to highlight some members’ concerns about the economy, in tandem with the continuing political risks surround the UK election, pressure should re-emerge on the currency.

AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

Another happy beneficiary of the USD unwind, the Australian currency has enjoyed a much better week and with a strong employment report there is decent scope for price to remain positive near term. RBA minutes and quarterly CPI will be the next hurdle

USDCAD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

A barnstorming week last week for the Canadian currency with a less dovish than expected BoC adding fuel to the fire which was lit on weak US data. BoC did however revise down their growth forecasts but cited the US recovery and a weaker currency as reasons to believe they would pull through.