Forex Today: The Dollar doesn't give up


Monday is a holiday in the United States and Canada. Later in the week, the Reserve Bank of Australia and the Bank of Canada will announce their monetary policy decisions. Trade data from China, Australian GDP, and Canadian jobs data are among the most relevant reports to watch for.

Here is what you need to know for next week: 

Chinese data will continue to be closely watched. National PMIs came in mostly above expectations, providing some relief. It is possible that additional stimulus measures could be announced. Trade data is scheduled to be released on Thursday.

US economic data did not bring many surprises during the week and provided arguments for the Federal Reserve to maintain unchanged rates at the next meeting. The Consumer Price Index on September 13 will be crucial ahead of the FOMC meeting on September 19-20. Key reports in the US next week include Factory Orders and revised Q2 Unit Labor Costs.

Despite mixed Nonfarm Payrolls data, the US Dollar Index jumped on Friday, surpassing 104.20 and it was heading towards the highest daily close since April. However, the 104.50 area remains a significant resistance level. The DXY need to consolidate above that area to open the doors to more gains, while below, it would be vulnerable to sharp corrections. 

The latest data shows inflation slowing down in the Eurozone, although not as rapidly as anticipated, and the activity outlook is worsening. This places the next European Central Bank (ECB) meeting in a precarious position. The prospect of a less hawkish ECB weighed on the Euro, causing it to pull back sharply after reaching weekly highs against the US Dollar, Pound, and Yen. The common currency was among biggest losers. Next week, Eurostat will report the Producer Price Index and compensation per employee during the second quarter.

EUR/USD posted its seventh consecutive weekly decline after erasing gains on Friday. The bias remains to the downside. Meanwhile, EUR/GBP continues to move sideways within a wide range between 0.8500 and 0.8700.

GBP/USD closed the week around 1.2600. Just when it appeared poised for a more significant correction, the pair pulled back sharply, falling towards the monthly lows and below the 20-week Simple Moving Average. The bias is currently sideways with risks tilted to the downside. On Wednesday, Bank of England’s members will testify to the Treasury Select Committee.

On a volatile week, USD/JPY finished hovering around 146.00. The pair remains undecided as it hit fresh monthly highs but then pulled back sharply.

USD/CHF managed to post another week of gains after surging on Friday. However, it remains below the 20-week Simple Moving Average, which is currently near 0.8900. Failure to rise above that level could trigger a sharp correction, while a break above it would set the stage for further gains for the USD/CHF pair. Switzerland will report its Q2 GDP on Monday.

The Australian Dollar was the best performer among majors during the week. AUD/USD recorded weekly gains after six consecutive weeks of decline. However, the pair is still struggling to break above 0.6500.

The Reserve Bank of Australia will announce its monetary policy decision on Tuesday. No change is expected. The outgoing governor of RBA, Lowe, will deliver a speech on Wednesday, explaining the latest decision. More importantly, the central bank meeting could be overshadowed by the Q2 GDP report, which is expected to show a 0.3% expansion, surpassing the 0.2% recorded in the first quarter. 

USD/CAD finished the week hovering around 1.3600, after surging on Friday following weaker-than-expected Canadian GDP data. The bias remains to the upside, but the 1.3650 barrier stays intact. Following Friday's negative GDP surprise, the Bank of Canada is widely expected to keep interest rates unchanged on Wednesday. On Friday, Canada will release the employment report.

 


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