BoC in focus

Frank Walbaum FX Strategies.Asia

Important news this week

Tue, 14th, 14:30 CET US Consumer Price Index.
Wed, 15th, 14:30 CET US Core Producer Price Index.
Wed, 15th, 15:45 CET CA BoC rate Statement.
Wed, 15th, 16:00 CET US Fed Chairman Warsh Testifies Before Senate.
Thu, 16th, 08:00 CET UK Gross Domestic Product.

Geopolitical risks return ahead of key inflation data

Markets have started the week on a more cautious note as renewed attacks in the Middle East have increased geopolitical tensions once again. Oil prices are moving higher as traders price in a higher geopolitical risk premium, while the US Dollar is gradually regaining strength on renewed safe-haven demand. Equity markets have opened slightly lower, with US technology stocks leading the decline after their recent outperformance. Investors are now becoming more defensive ahead of an important week of economic data.
The stronger Dollar is weighing on several asset classes. Bitcoin has slipped lower, with altcoins showing even greater weakness as risk appetite fades. Gold and Silver are both struggling near key resistance levels, and the latest rejection suggests the recent rebound may be losing momentum. Silver continues to look more vulnerable than Gold due to its stronger industrial component, meaning a weaker global growth outlook could accelerate downside pressure if the US Dollar extends its gains.

Market talk

This week's focus shifts to several major macro events that could determine the next move across FX markets. Tuesday's US CPI report will be closely watched for signs that inflation remains persistent, followed by US Core PPI on Wednesday. Markets will also monitor the Bank of Canada's rate statement for guidance on future policy, while Fed Governor Kevin Warsh's testimony may provide further insight into the Fed's inflation outlook. UK GDP on Thursday will complete a busy week for FX traders. If US inflation surprises to the upside, expectations for higher US rates could strengthen the Dollar further, while equities, metals, and cryptocurrencies may come under additional pressure.

Tendencies in the markets

Equities correcting, USD stronger, BTC weakening, oil rising, Silver weaker, Gold weaker.

Author

Frank Walbaum

FX Strategies.Asia

Frank has been working in the TV business for several years. Acquiring his skills in Germany’s biggest broadcasting station, he then chose to work and live in Asia, which was in 2007.

GBP/USD holds losses below 1.3400 amid escalating US-Iran tensions

GBP/USD finds some support near 1.3370 after a modest gap-down opening, though it lacks bullish conviction and remains below 1.3400. The pair suffers from a return of haven demand for the US Dollar amid renewed US-Iran military attacks and the resultant closure of the Strait of Hormuz. All eyes remain on Mideast updates and central bank talks.

EUR/USD battles 1.1400 amid USD strength, Iran risks

EUR/USD stays defensively close to 1.1400 in European trading on Monday. The pair faces headwinds as the US Dollar starts the week on a strong note on increased safe-haven appeal, following the weekend escalation between the US and Iran. However, hawkish ECB expectations limit the major's downside ahead of speeches from the Fed and ECB policymakers.

Gold seems vulnerable amid Iran risks reviving inflation fears, Fed hike bets

Gold maintains its offered tone through the Asian session, and currently trades just above $4,050, down nearly 1.40% for the day. A further escalation of tensions between the US and Iran, along with the closure of the Strait of Hormuz, lifts crude oil prices and revives inflation fears. This, in turn, bolsters expectations of higher interest rates by the US Federal Reserve, which benefits the safe-haven US Dollar, and drives flows away from the bullion.

Cardano: Ongoing whale accumulation fails to halt downward correction

Cardano (ADA) extends its losses, trading below $$0.160 after falling over 14% in the previous week. Despite on-chain data showing continued accumulation by whales, the buying activity has failed to lift prices. Meanwhile, bearish derivatives metrics and a weakening technical outlook indicate further downside for ADA.

The US won't default on $39 trillion debt: Why financial repression is coming and Gold is the only hedge

As the US national debt surges past $39 trillion, policymakers face an unsustainable economic trajectory that threatens the global financial system. With a formal default out of the question and fiscal austerity politically unfeasible, the US government is increasingly likely to rely on financial repression, artificially keeping interest rates below inflation to erode the real value of its debt.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.