This week we have a virtual tsunami of data coming out. We have 4 major central bank interest rate decisions starting on Tuesday with the RBA. Then on Wednesday we have the RBNZ, followed by both the ECB and BOE on Thursday. We end the week with Friday’s NFP report here in the US so we expect to see a ton of activity this week. The main theme is still a Dollar that is trying to stabilize in the face of continued inflationary pressures. Most analysts expect none of the central banks to move rates so it does seem that we have entered into a global pause which could last the balance of this year. Any surprises would likely be on the side of cutting not hiking. Overall this pause does point favor continued stabilization of the Dollar. We continue to be Dollar buyers on dips.
EUR/USD:
The Euro spent the latter half of last week stuck in and around the 1.55 handle. We still see this market as being range bound between roughly 1.53 – 1.59. Since we are getting closer to the lower end of that range we will begin to look at buying dips below 1.55 early this week. Since we are still near the mid point of the range any trades taken should be half size or less.
GBP/USD:
The Cable spent most of last week stuck around the 1.9750 handle. It seems as if it is trying to break free from that level early this morning. We could see this pair fall back to retest support yet again below 1.95. The BOE rate decision looms over this pair all week and the early data so far has traders fearing a cut more than anything else. We would not be surprised to see them cut rates but even if they do we expect to buy long once this retest of support holds.
USD/CHF:
The chef pushed to retest the upper end of the range mentioned in the last issue. Since failing to break out it is now looking like it will drift lower this week to now test the lower end of the range which again is near 1.02, so we are therefore sellers of rallies this week.
USD/JPY:
This pair, as we mentioned last week, should remain range bound for the near future. Since we failed to break out of that range last week we are, much like the chef, poised to retest the lower end of the range near 103. So here too we are sellers of rallies.
AUD/USD:
The Ausi spent the week trading in a narrow range in anticipation of tomorrows RBA rate decision. The consensus is for no change so we expect to see this pair begin to pullback now that the RBA is also seemingly in a pause mode. We are sellers of rallies after the RBA announcement.
USD/CAD:
Support at the lower end of the range has so far held. We are looking to sell any rallies back above parity as we are still looking for a downside break out below .9800 in the not to distant future.
