Inflation Data From The US and The UK To Drive The Market in the Short Term

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Neutral Spot at 1.0904
EUR/CAD: Neutral. Spot at 1.4550
GBP/CAD: Bearish. Spot at 1.8141
EUR/USD: Neutral Spot at 1.3347
GBP/USD: Bearish. Spot at 1.6638
Today’s Commentary
USD/CAD Commentary

The dollar traded higher against most major currencies on Monday, buoyed by upbeat data out of the U.S. housing sector and by hopes diplomatic efforts to end the Ukraine conflict will produce concrete results. The U.S. dollar slipped against its Canadian counterpart on Monday, but losses were expected to remain limited as disappointing data from Canada weighed on demand for the loonie.

The US Dollar has been a favourite in the currency market in the latter few weeks, following a mass of upbeat US figures, and a more hawkish Federal Reserve. The Federal Reserve are due to release their latest July meeting minutes on Wednesday, which may give further encouragement to an already buoyant USD.

Canadian Dollar is thought likely to suffer as a potential deal involving Iran moving towards reconciliation with the international community is warming. Investment in Iran by foreign firms is increasing as early movers hope to take advantage of opportunities if sanctions against the country are lifted. Should Iran be in a position to supply oil to the international market the Canadian Dollar is likely to suffer as the price of oil would be suppressed and the supply of oil into the market is likely to increase.

Today, the U.S. is to release reports on building permits, housing starts and consumer inflation. Tomorrow will be a heavy day due to FOMC and BOE minutes in the US and the UK while in Canada there is a report on Wholesale Sales that is expected to weaken. The Canadian Dollar however is now looking toward a highly influential data on Friday, with the publication of the Bank of Canada’s (BoC) Consumer Price Index, and Retail Sales figures.

Short term technicals continue to remain bullish with resistance located at 1.1004 while support is located in the 1.0870.

Today’s expected trading range is 1.0870 – 1.0940

EUR/USD Commentary

The euro, continued to come under pressure due to ongoing expectations that monetary stimulus programs in the U.S. will wind down at the same time the European Central Bank takes steps to loosen policy, while markets remained focused on developments in Ukraine.

Despite a positive figure yesterday for June, other Trade Balance figures may not prove as fortuitous with recent sanctions imparted against Russia causing a backlash for the EU. The EU has had its trading outlook crippled with Russia banning imports from them in retaliation for the heavy sanctions. Germany’s Central Bank, Bundesbank, has stated today that the Eurozone is growing much more lethargically than some had expected.

On Thursday, the euro zone is to publish preliminary data on gross domestic product, in addition to revised data on consumer price inflationy. Friday there is no report in the Euro Region as the markets are closed for assumptiion day.

Short term technicals continue to remain bearish where the support is located at 1.3292 and resistance at 1.3452.

Today’s expected trading range is 1.3305 – 1.3375

GBP/USD Commentary

The pound firmed against the dollar on Monday after Bank of England Governor Mark Carney said over the weekend that interest rates could rise sooner than many have been expecting. The pound strengthened broadly after Bank of England Governor Mark Carney said over the weekend that interest rates could rise before wage growth picks up.

Carney stated that the UK economy was ‘much more than halfway towards that finish line’, continuing that the UK economy still faced its most vicious headwinds ahead. The losses incurred during the last week of trading by the British asset were adjudged to be ‘over done’ and this presented a buying opportunity for long Sterling traders who took the opportunity to increase positions in the UK currency.

The U.K. is to produce data on consumer inflation today, which accounts for the majority of overall inflation. Investors are looking ahead to tomorrow’s minutes of the BoE’s August policy meeting for signs that the bank is moving closer to hiking benchmark interest rates.

Short term technicals continue to remain bearish with the support located at 1.6688 while resistance is located at 1.6851.

Today’s expected trading range is 1.6600 – 1.6675

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Opening FX Rates (USD)
USD/CAD 1.0904
EUR/USD 1.3347
GBP/USD 1.6638
USD/JPY 102.65
AUD/USD 0.9336
USD/HKD 7.7501
USD/PLN 3.1377
USD/THB 31.85
Opening FX Rates (CAD)
USD/CAD 1.0904
EUR/CAD 1.4550
GBP/CAD 1.8141
CAD/JPY 94.11
AUD/CAD 1.0179
CAD/HKD 7.1062
CAD/PLN 2.8767
CAD/THB 29.21
Opening Commodities (USD)
Oil 94.21
Gold 1301.80
Silver 19.67
Economic and Event Calendar
EUR – Current Accounts Aug 19
GBP – Consumer Price Index Aug 19
USD – Building Permits Aug 19
USD – Consumer Price Index Aug 19
GBP – Bank of England Minutes Aug 20
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