Weekly Trading Forecast: US and China Ensure Trade Wars, Dollar and Pound Look for Guidance
Risk trends were remarkably sanguine this past week in the face of confirmed tariffs placed by the US and China on each other. Don’t expect risk trends or benchmark FX currencies to simply ignore the growing risks going forward.
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The Dollar took a notable spill to close out this past week as employment data came in close to expectations, local capital markets (like the Dow) charged and tariffs on China went into effect. So what will guide the currency moving forward?
Economic data has started to improve more broadly alongside inflation expectations, and now traders will look to ECB President Mario Draghi’s two speeches this week for clues on monetary policy.
The British Pound continued to bounce from a key support area this week, as driven by some positive comments from BoE Governor, Mark Carney. But a large cloud hangs over the currency as a key point in Brexit discussions takes place after today’s market close.
The Australian Dollar’s comprehensive beating at the greenback’s hands may not be finished for the year, but we may see its ferocity slacken now.
The Canadian Dollar may fall if the BoC delivers a ‘dovish hike’. Donald Trump potentially retaliating to Justin Trudeau’s tariff counter measures adds more pressure to CAD too.
The escalated US-China trade war and event risks from China’s Foreign Reserves and New Yuan Loans will all weight on the Chinese currency and equities.
Oil prices may exhibit a more bearish behavior over the coming days as they snap the recent range and initiate a series of lower highs & low.
Gold nudged higher this week with prices rebounding off a key support zone as the trade war intensifies. These are the updated targets & invalidation levels that matter.
See how retail traders are positioning in the majors using the IG Client Sentiment readings on the sentiment page.
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