Weekend Summary & the Week Ahead
Busy week ahead with hot economic data out of the US, Canada, euro zone and China, creating possible trading opportunities on EUR/USD, AUD/USD, USD/CAD and more. Here is what's up on the forex dance floor this week.
Greek Headlines Continue
Rumor has it, Greek government and euro zone leaders stayed up all night and continued their not-very-romantic talks which resulted in a reform-for-aid deal for the debt-stricken country. At around 8 a.m. London time, President of the European Council, Donald Tusk, tweeted that discussions had "unanimously reached agreement."
Following the epic tweet, Mr. Euro jumped up out of joy on the forex dance floor but was soon dragged down again by all the skeptical investors who started saying "Big deal. This means Greece with all its problems is going to stay in the euro zone."
So as expected, Mr. Euro is back inside the Ichimoku cloud as he dances against Ms. USA. We are still on track with our Bearish EUR/USD trade.
China & Mr. Aussie
As Australia's trading buddy, China needs to be in the focus on Aussie traders. First economic data on Monday's Asian session was China's export sales which unexpectedly rose for the first time in four months in June and imports fell again but posted their best performance this year, causing some optimism tepid trade flows are picking up, and therefore getting Mr. Aussie a boost against his major dancing partners.
However, hopes were offset by a realization that China's trade sector had a poor second quarter, with volumes contracting significantly from a year ago, further dragging on an already stuttering Chinese economy. So just like Mr. Euro, Mr. Aussie was hammered back down on the forex dance floor as he danced against Ms. USA, and our AUD/USD trade also remains in the green balance.
National Australia Bank (NAB) will publish their business confidence index on Tuesday at 2:30 AM GMT which could give Mr. Aussie more cues on his dance moves. the index a leading indicator of economic health - businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment.
U.S. June Retail Sales Report
Also on Tuesday, we are expecting the retail sales report for June to be out at 1:30 PM GMT which is early on in the New York session. the number is expected to show a mere 0.4% uptick, a slower pace of increase compared to the previous month’s 1.2% gain. Meanwhile, the core version of the report which excludes volatile items such as automobile sales could indicate a 0.7% increase, lower than May’s 1.0% rise.
A quick review of the ongoing trend in U.S. retail sales figures reveals that five out of the past six releases fell short of market expectations, which suggests a strong possibility of seeing a downside surprise. Take note, however, that this particular report has been seeing positive revisions in the past three months which still reflect positive contributions to overall growth.
This could be an opportunity for short-term traders as the USD usually reacts rapidly to the news, and then makes corrections. Long term traders, stay tight and avoid sudden emotional acts!
A good place to trade this news is the USD/JPY forex dance floor as Mr.Japanese Yen is staying quit this week so Ms. USA can focus all her epic moves against him.
More in the coming week, is UK CPI also on Tuesday followed by Canada's manufacturing sales and Bank of Canada's rate statement on Wednesday. US unemployment claims are scheduled to be out on Thursday, and more CPI readings on Friday from Canada and the US. With this, we might want to focus on the USD/CAD pair this week, what do you say?