Forex – Review and Outlook for July

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forex-outlookForex in perspective.

The previous week witnessed some changes in the major currencies. Let us have a look at them.


The greenback was weaker among the majors even after the final GDP reading for the week significantly increased from 1.2% to 1.4% instead of staying unchanged as earlier anticipated. Personal spending and income, when added to the PCE price index, was strong and it helped shore up the greenback.


The EUR was able to hold on to its earlier attained gains after the medium-tier reports turned out better than expected. The preliminary CPI released by the Germans was up 0.2% against the earlier expectation of it staying flat. The GfK consumer climate index also went up from 10.4 to 10.6.


The pound sterling continued its recent ascent as BoE member Haldane still talked about his views and Governor Carney admitted that decreasing the level of stimulus might be needed to curb the inflation. The UK net lending to individuals turned out better than expected as the UK current account balance and its GDP readings will be released soon.


The Swiss franc still retained its gains as sentiments improved in Europe. There was no major report about the Swiss economy this week. A rise from 101.6 to 102.5 is expected and this will further strengthen the franc.


The weakness of the Yen was visible last week as bonds were sold off worldwide. BoJ head Kuroda has expressed some reluctance in reducing stimulus.
Commodity Currencies (AUD, NZD, CAD): These currencies raked in more gains as the risk raised by appetites further extended. Australia’s HIA new home sales posted a 1.1% increase, exceeding the expected 0.8%. New Zealand reported a higher ANZ business confidence index of 24.8 from the earlier 14.9 figure.

Forex forecast for week July 3rd-7th 2017

This week began on a very quiet note for the greenback, although we enjoyed a USD/JPY signal during Sunday/Monday Asian session which subsequently reached our third take/profit target in the early hours of July 4th. Speaking of July 4th, the US Independence Day on Tuesday and Canada day means the markets are on vacation on Tuesday. As the week progresses, the US employment report will come into focus and trading is expected to liven up toward the end of the week.

In Europe, the major drivers will come from the EU-wide PMIs as it is being expected that the ECB minutes will not change the mood. Currently the EUR/USD is eyeing out 1.1500-1.1600, EUR/JPY 130.00+ with EUR/GBP sliding back towards the resistance zone of 0.8900. The pair of EUR/CHF is expected to reach 1.1000.

In the UK, the first part of the week is dominated by manufacturing, construction and services PMIs; improved results will be needed if the BoE’s change in policy tack is to be believed. With Brexit in the background, and for some time to come, fading strength at these levels should and will be expected. The pair of EUR/GBP is set for higher levels as its initial resistance level of 0.8900 is getting congested with it probably moving into 0.9000. Industrial and manufacturing production comes out alongside trade on Friday.


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