NFP at the end of last week made some changes to the table, although the USD remains unchanged.
That being said we have some key data points coming up this which includes some of the following:
US PPI & CPI figures. A strong jump in inflation could counteract the weaker jobs data, a weaker inflation number would likely compound the USD weakness.
ECB interest rate decision. Forecasts suggest the European Central Bank is likely to keep rates unchanged in this meeting.
GBP GDP. The latest growth figures will come out of the UK with forecasts showing a further decline.
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:
GBP: The British pound remains one of the stronger currencies however we are now beginning to see a potential reversal as the currency has moved from a strong +5 down to +4. Stronger than expected retail sales last week left sellers a little dissatisfied, however GDP could bring the data they need to remain short.
CHF: The Swiss Franc continues to remain strong moving from +3 to +4. This is a currency that is trending against most of its weaker counterparts.
EUR: The Euro has reached +3 gaining 2 places, fundamentally the currency is strong and this looks likely to continue if the US begins to see a decline.
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 -5 and is where I would like to target for opportunities, so no change here. Oil prices have taken another dip lower and could be a catalyst to continue to short Canadian dollars.
NZD: The New Zealand dollar also remains weak and unchanged on the currency strength meter.
Markets to watch
Based off of the above these are the currency pairs on my trading watchlist:
Bullish | Bearish |
GBPCAD | CADCHF |
GBPNZD | NZDCHF |
EURCAD | |
EURNZD |
Be aware that the GBP could be forming a reversal so upside to GBPCAD or GBPNZD could become limited.
As always this doesn’t mean we just go to these markets and start pressing buttons. We need to add in other factors of confluence. But it’s a start for deeper analysis.
Good luck this week traders. Chat soon.