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FX Market Macro Wrap 02 Sep 17

FX Market Macro Wrap 02 Sep 17

FX Market Macro Wrap 02 Sep 17 
 

USD was relatively buoyant at the start of the week thanks to strong ADP employment data and upward revision in the Q2 GDP. However, weak US PCE index and nonfarm payroll data has disappointed dollar bulls and hence, we may see some consolidation ahead of the Fed speakers next week. We will hear from Fed’s Brainard and Dudley on Tuesday and Friday respectively.

 

In terms of the other G10 currencies this week, GBP is the unexpected gainer despite any significant release. The UK manufacturing PMI did report unexpectedly strong number but the bulk of GBP gains was prior to the release. SEK and CAD were second strongest this week ahead of the meeting of their respective central bank; investors are wary that Riskbank may surprise to the hawkish side while BoC may even hike next week. NZD and JPY were the biggest losers this week due to idiosyncratic reasons; NZD fell on weaker than expected terms of trade and fears that elections may impact monetary policy while JPY fell due to an improved risk appetite. AUD was also buoyant by improved risk sentiments and better than expected domestic data. However, we may see a consolidation in AUD ahead of the RBA rates decision next week; the RBA is expected to remain on hold but given improved risk appetite we may see RBA keep their positive view on the economy which may help AUD.

 

The fourth central bank meeting next week will also be the most important; the ECB will meet on Thursday but no change to the policy is expected. We can expect some revision in forecasts with the most important being CPI projections. Overall, the risk to EUR remains skewed to the downside from a slightly dovish ECB.

 

Along with the central bank meeting, the rest of the economic calendar will also be busy next week. To name a few, the Euro-area retail sales on Tuesday, the Australian Q2 GDP and US non-manufacturing PMI on Wednesday, Australian trade balance on Thursday, Chinese trade balance, the UK manufacturing production and Canadian jobs data on Friday, will be the key release.

 

This article is an extended commentary piece from the FXNavigator service. The FXNavigator service provides intraday analysis of 42 currency markets with technical and economic research being updated multiple times per day. The service also includes fully interactive real-time FX charting utilizing TraderMades exclusive database of more than 40 years of data. Contact us at +44 20 8313 0992 or email for further information.

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