Calendar Week 28-2022

 

A busy schedule in the week ahead should provide some directional trading and volatility. Last week finished with the USA job numbers coming in hotter than expected, adding 372K over an expected 260K. That gave the market the belief that the US Fed will certainly raise rates by 75 basis points on July 28th. The market has priced that in but also priced in a halt and no more beyond that, as recession odds rise.

 

Inflation

 

This week we get to see the US inflation numbers for June. Market is expecting 1.1% taking the annual rate to 8.8%. However, with commodity prices dipping, consumer sentiment plunging and manufacturing PMI’s shrinking it could be argued that inflation is at its peak. If the Fed do raise rates again in their next meeting in September (no meet in August) as a reaction to inflation, a hard landing will be had.

 

News Ahead

 

Also this week both the Bank of Canada and the RBNZ are expected to hike rates by 50 basis points mid-week. Thursday is Australian unemployment, and we finish the week with Chinese GDP, US retail sales and consumer sentiment. That is a lot to digest and unpack during the week and should supply enough volatility to jump into.

 

 

Currency Guidance

 

AUDUSD bounced around in a 130 pip range last week. With the Greenback looking like its temporarily peaked, we could see the Aussie scramble back up to test 0.7000. Longer term I do not see the Aussie pushing higher so still prefer to fade it off resistance.

 

EURUSD clearly broke the neckline of the Head and Shoulder pattern at 1.0350, and a retest of that will be a good place to short it. Fundamentally you do not want to be long the Euro yet, but it might have a relief rally back to the neckline, providing a great opportunity.

 

GBPUSD is economically and politically a mess and whilst it will get a relief rally from the USD retracement, my preference is to fade this one too off resistance circa 1.2150.

 

USDJPY has been chopping sideways for best part of 3 weeks between 134.50 and 136.50, although the lows of each move are gradually getting higher forming a wedge pattern. Perhaps the US inflation numbers will be the deciding factor to break out of the pattern.

 

USDCAD choppy, frothy, messy. Trading this one is a good way to loose good money. Consistent direction hard to find.

 

NZDUSD almost identical chart to the Aussie and so the play is similar too although clear resistance level harder to find.