After this past week we have seen some huge changes to the currency strength and weakness. Some of these moves could be sustained but some may need a little more of a push to keep going.
That being said we have some key data points coming up this which includes some of the following:
US Retail Sales and Interest Rate Decision. The USD could continue to come under pressure this week as key data points to negative economic pressures. Retail sales are forecast to fall from 0.5% to 0.2%. Interest rates are expected to be cut to 4.25% too.
Bank of Canada Interest Rates and CPI. The Consumer Price Index forecast to fall from 0.3% to 0.1% in line with the recent decline in oil prices. The central bank is forecast to cut rates from 2.75% to 2.50%.
In the UK the Bank of England is forecast to leave rates unchanged at 4.00%.
Let’s take a look at what to watch.
Strong Currencies
My currency strength meter highlights these currencies as the strongest as of last week:
AUD: The Australian dollar moved to the top of the pile, coming in at +7 from +2. This is something we documented a while back as the RBA may be forced to leave rates higher for longer if CPI fails to come in lower.
NZD: The New Zealand dollar moved from -4 to 2 as the markets remained risk on.
GBP: the British pound is technically strong but has begun to reverse from +5 to now just +3, this shows us that the weakness could be coming into the market.
Weak Currencies
Looking at the opposite side of the strength meter now, these are the weakest of last week:
CAD: The Canadian dollar is a weak currency at -7, rate cuts and lower oil prices could see the weakness continue.
USD: The USD could continue to remain weak, the Federal Reserve is highly likely to cut interest rates with the CME Fed Watch Tool pointing to a 100% chance of a cut.
Markets to watch
Based off of the above these are the currency pairs on my trading watchlist:
Bullish | Bearish |
AUDCAD | |
AUDUSD | |
NZDCAD | |
NZDUSD | |
GBPCAD | |
GBPUSD |
The Australian dollar is the strongest currency and if the risk on sentiment remains could be the one to watch, AUDCAD and GBPAUD looks good for trading opportunities this week.
As always traders, do your own research and let’s see how this week goes.