Monday July 17
All Day JPY Bank Holiday
2:00pm CNY GDP q/y
Forecast 7.10%
Previous 4.50%
2:00pm CNY Industrial Production y/y
Forecast 2.50%
Previous 3.50%
Tuesday July 18
12:30am USD Empire State Manufacturing Index
Forecast -3.5
Previous 6.6
1:30pm AUD Monetary Policy Meeting Minutes Read more
Market Overview
This week will be highlighted by interest rate decisions from the RBNZ and the Bank of Canada, while also focusing closely on inflation data out of Europe and the USA. Inflation had been crashing in recent times, so any reversal in the trend, could have a major impact on the direction of currencies. Trade agreements with the EU and a European Finance Ministers Summit will add some macro geo-political perspective and spice to markets this week, but inflation and growth remain key drivers.
Major Announcements last week:
-China/German/USA Inflation Reports
-RBNZ and Bank of Canada Rate Decisions
-UK GDP Growth
-China Trade Exports/Imports.
Europe has been negotiating a trade agreement with Australia and separately with Japan and NZ. These trade negotiations will have little impact on the currencies and the cross-rates, in the short-term, but are a good sign for the future of the European economy. Inflation in Germany has been falling fast, but any resurgence, will reinforce hawkish monetary policy and add to the upward pressure on the EURO.
Current Level: 0.6105 (1.6380)
Resistance: 0.6121 (1.6337)
Support: 0.6067 (1.6482)
Last Weeks Range: 0.6051-0.6113 (1.6526-1.6358)
The Bank of England remains hawkish, as they attempt to get runaway inflation under control. How much, these rising interest rates hit the consumer and the economy, will be the big question. UK GDP growth, this coming week, will be a window into the state of the economy. Higher interest rates will drive the GBP higher, but recessionary pressures should counter-balance the pressure.
Current Level: 0.5231 (1.9117)
Resistance: 0.5249 (1.9052)
Support: 0.5182 (1.9299)
Last Weeks Range: 0.5231-0.5157 (1.9116-1.9391)
The RBA’s pause in interest rate rises, has added to the downward momentum of the currency, along with recessionary pressures hitting commodity demand and prices. This week’s inflation number, out in the USA, will be a big directional driver of the AUD, this coming week. The expected rebound in the post-COVID Chinese economy, has been restrained and the Chinese trade numbers, set to be released Thursday, will have an impact.
Current Level: 0.6805
Resistance: 0.6827
Support: 0.6713
Last Weeks Range: 0.6785-0.6869
ECB President LeGarde has been extremely hawkish in monetary policy, with the mantra, ‘higher for longer’. The ECB have been way behind on the yield curve, acting on inflation very late in the game, which gives them some latitude for further rate rises. Recessionary conditions in Europe prevail and put a brake on interest rates and the currency.
Current Level: 0.5671 (1.7633)
Resistance: 0.5678 (1.7612)
Support: 0.5622 (1.7787)
Last Weeks Range: 0.5611-0.5668 (1.7822-1.7642)
UK inflation is the highest of the Western economies and therefore pushes the Bank of England to continue to raise rates, which adds to support for the GBP. The cross rate has been relatively static, but any increase in the interest rate differential, between the two currencies, could change the direction of the cross rate.
Current Level: 0.4862 (2.0567)
Resistance: 0.4875 (2.012)
Support: 0.4803 (2.0820)
Last Weeks Range: 0.4780-0.4859 2.0920-2.0580
The RBA surprised many, by pausing rate rises, adding downward pressure to the AUD currency. The NZD/AUD consequently had further upward momentum, rising to 0.9300. The RBNZ monetary policy decision tomorrow, will set the direction of the cross rate, over the next week. A surprise rise will only add to the KIWI strength.
Current Level: 0.9290 (1.0764)
Resistance: 0.9299 (1.0754)
Support: 0.9244 (1.0817)
Last Weeks Range: 0.9235-0.9320 (1.0828-1.0730)
The RBNZ Rate Decision is scheduled for Wednesday and they are expected to follow the RBA and Federal Reserve, hitting the rate rise ‘pause button’. Inflation has been tumbling lower across Europe, but remains stubbornly high in Germany, while Core inflation has been persistent in the USA. NZ Inflation has been very high and cost of living pressures must add to pressure on the RBNZ to tame inflation. Raising rates hits the consumer hard, through mortgage rates, so therein lies the problem. The RBNZ is ‘caught between a rock and a hard place’. The NZD is trading around 0.6200 in the lead up to the RBNZ decision.
Current Level: 0.6318
Resistance: 0.6343
Support: 0.6216
Last Weeks Range: 0.6285-0.6319
Market Overview
This week will be highlighted by interest rate decisions from the RBNZ and the Bank of Canada, while also focusing closely on inflation data out of Europe and the USA. Inflation had been crashing in recent times, so any reversal in the trend, could have a major impact on the direction of currencies. Trade agreements with the EU and a European Finance Ministers Summit will add some macro geo-political perspective and spice to markets this week, but inflation and growth remain key drivers
-China/German/USA Inflation Reports
-RBNZ Bank of Canada Rate Decisions
-UK GDP Growth
-China Trade Exports/Imports