- Aussie picks up against struggling Kiwi ahead of CPI
- US CPI may shift assessments of expected Fed policy
- BoJ's Nakaso may cast a little light on policy
- Whether EURUSD can threaten 1.3500/1.3490 again (a strong US CPI release a possible catalyst in early NY hours). The pair looks heavy.
- Whether GBPUSD gets nervous and pushes toward 1.7000 – 1.7050 looks like a catalyst for that scenario, as the market nervously eyes the BoE minutes tomorrow .
- Whether USDJPY remains above 101.25/35
- The direction AUD chooses, both in the crosses and especially in AUDUSD after the CPI release in Asia.
- Looking for USDCAD direction as well after several days in a very tight range.
- UK Jul. CBI Trends in Total Orders/Selling Prices (1000)
- Hungary Central Bank Decision (1200)
- US Jun. CPI (1230)
- US Jul. Richmond Fed Manufacturing Index (1400)
- US Jun. Existing Home Sales (1400)
- Australia RBA’s Lowe to Speak (0120)
- Australia Q2 CPI (0130)
- Japan Bank of Japan Deputy Governor Nakaso to Speak (0130)
Yesterday might as well have been the third day of a weekend, as far as currency volatility is concerned, as the USD majors poked around in very tight ranges, though USDJPY did manage to show a bit more initiative and pulled to a three-day high by this morning, once again challenging the notion that the perma-range down toward 101.00 will ever break. Looks like today will be a pivot day that confirms we are steering clear of lower levels for now. Let’s watch the 101.35/25 area for a key tactical support.
The European Central Bank’s Weidmann was out talking up the moral hazard risks from low interest rates, that they might be used to finance additional spending rather than consolidating budgets. He (of course) spoke against additional measures. The Reserve Bank of Australia’s Stevens triple underlined that the bank is in wait-and-see mode, suggesting he is entirely content with where policy stands at the moment. Chart: AUDNZD The Aussie has picked up some steam lately against the struggling Kiwi, with tonight’s Q2 Australian inflation data likely to add to the rise or trigger consolidation. In the bigger picture, it appears the pair is building a base, with the first confirmation of a new bulls market above 1.0825 and the really big level up above 1.1000. First support comes in around 1.0775/50 on a weaker than expected Aussie CPI release.
Looking ahead The action should heat up a bit in early New York hours as we have the US June CPI data on tap. While Yellen seems to stress the employment side of the Fed’s dual mandate, a high CPI release would be an interesting test of the market’s thoughts on what it means for Fed policy – does the market shift forward the anticipation of Fed rate hikes or does the USD weaken because the market sees the Fed as being behind the curve and not interested in responding to higher inflation (meaning anticipated real rates would be lower and thus bearish for the currency). Watch the Asian session, not only for Australia’s CPI data and whether this can encourage another attempt above 0.9400 in AUDUSD (or a return of the downside and eventual threat of the 0.9320 area), but also for Bank of Japan Deputy Governor Nakaso for possible policy hints from the Bank of Japan. Today, I will be on the watch out for following developments:
Above all, I am hoping in general that this market can build some energy, as EURUSD notched its record 32nd day in a row yesterday with a trading range below 100 pips while my ATR measure (50-day EMA) touched a fresh record low at 0.39%. Upcoming Economic Calendar Highlights (all times GMT)