- The main macroeconomic influence on markets over the past week has been the multiple speakers from the US Federal Reserve (Fed), who have chiefly attempted to supress market expectations for more aggressive rate cuts.
- This heightened market anticipation for more significant rate cuts and very dovish Federal Open Market Committee (FOMC) have been a consequence of the substantial turnaround in the Fed tone, in reaction to concerns of an escalating global trade war and economic slowdown (alongside the May equity market sell-offs).
- Reports and rumours of a trade truce between the US and China have helped the “risk” currencies (AUD, NZD, CAD) higher late from midweek and the “safe haven” currencies (JPY and CHF) lower.
- USD: A rebound since the middle of the week as Fed speakers have tried to quell rate cut fervour but doing little to temper the USD weakness seen through June.
- EUR: Mixed; a strong rally against the USD (EURUSD) and GBP, but weaker versus the “risk” currencies (AUD, NZD, CAD).
- JPY: Weaker late this week, with hopes of a US-Sino trade deal or truce.
- GBP: Staying broadly weak, as no deal Brexit fears weigh with Boris Johnson expected to be the next UK Prime Minister.
- AUD: Strong (alongside the NZD) from trade deal/ truce hopes.
- CAD: Stays strong as Oil soars amid Middle East tensions surrounding Iran.
To learn how to take advantage of these major currency pairs, see our trading courses for information about strategies, both swing and news based strategies. Below are the important events to watch out for next week.
Spotlight for FX next week
- 28th & 29th June – G20 Meeting in Osaka, Japan
- 1st July – Global Manufacturing Purchasing Manager Index (PMI)– China and the US in the spotlight
- 2nd July – Reserve Bank of Austrasia (RBA) rate decision
- 3rd July – Global Services (PMI) – Focus on China and the US
- 4th July – US Markets closed for US Independence Day,
- 5th July – US Employment Report
See more from Steve Miley at FXExplained.co.uk