Another week and yet another flight to the dollar. Despite dovish comments from Fed Brainard and weaker data on Thursday that gave the major Forex Pairs a fighting chance during the week, it was stronger inflation data yesterday that gave the dollar further impetus to get back on the front foot. Positive data may have given the USD bulls a glimmer of hope for a September Hike next week, but my personal opinion is that there is little chance of a hike in September, I do think that traders will try and look for clues about chances of a December hike.
The GBP felt the brunt of the force, it was obliterated into submission as a dovish central bank left rates on hold and other economic data missed the mark. One did get the impression last month that traders were looking for reasons to sell the GBP and they obviously found that this week. The GBP broke through numerous major technical levels as it traded from around 1.3250 to finish the week a little below 1.3000, the major take away is how easily these levels were broken and one would fear for cable going forward as the bears sit firmly in the “pound” seats.
The EURUSD traded in a tight range for the most part and we anxiously waited to see which level the pair would break. The 200 day MA did offer a fight but in the end of the day it closed around 1.1150, next week 1.1200 will come into focus as this becomes a major resistance level. The USDJPY was oddly subdued during this chaos and was largely range bound the entire week, we eagerly await this pair to break out next week and nothing like a FOMC decision to do that for us.
Gold was down for the week by 1.14% and the oil price fell by a staggering 8%. This unsurprisingly put pressure on the commodity prices with the AUD, NZD and CAD falling over the course of the week. On a side note, the CAD was fairly resilient considering the slide in the oil prices.
As we enter next week one feels that we may see a slight rebound in the majors against the greenback, we may also see a bout of profit taking heading into the FOMC on Wednesday night. The main attraction will get under away on Wednesday night though and it promises to be an eventful one.
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