FX & Money Markets Daily: A Slow Start To A Busy Week

Daily Forex Fundamentals | Written by Jyske Bank | Jul 28 08 06:23 GMT |

Today's Comment Majors & Scandies Markets were off to a bad start on Friday however sentiment improved in the afternoon as macro economic data showed that the number of new home sold and the number of incoming orders on durable goods were higher than expected in June. Thus the USD found a bit of support and ended the day a bit off Friday's lows versus EUR. It looks like it is going to be a very quiet start to the week as the macro economic calendar is empty. Later this week however there is plenty of opportunity for volatility on the USD as macro economic data (including consumer confidence, ISM indices and the all important Non-farm payrolls report) is pouring in from the US. Technically speaking EURUSD seems well supported around the 100-day moving average (currently at 156.57) and with momentum indicators starting to point towards the upside we expect the currency cross to remain supported in the short term. However as the prospects of elevated volatility lurks ahead we maintain a neutral stance on the currency cross for now. USDCAD has risen in the past week on the back of a stronger USD and falling oil prices. From a technical point of view momentum on the upward move on the currency cross is staring to wear off. As we expect USDCAD to find resistance around 102.50-103 corresponding to previous highs we have chosen to maintain a neutral stance at this point and have chosen to adjust our interval on the currency cross slightly. However a break above this level will pave the way for a further rise on USDCAD towards 105.00 Emerging Markets Friday was once again a positive day on EM and most currencies ended the day up against EUR. The underperformer was once again ISK down 1.1 %. July inflation came out higher than expected and this should have provided support for the currency through expectations of further hikes in the key rate. But this was not the case and it clearly illustrates that focus in Iceland is not on CPI numbers and the key rate at the moment, but rather on 2Q earnings announcements from the financial sector coming out this week. This focus is also illustrated by CDS spreads on the Iceland banks increasing. Disappointing earnings numbers will leave ISK very vulnerable. The target on our short ISK recommendation was reached and we choose to remain on the sideline for now. In Colombia the key rate was hiked with 25 bps to 10 %. We had expected rates to be left on hold, but acknowledged that it was going to be a close call. The decisive factor was the strong increase in both actual and expected inflation. We expect rates to be left on hold in the months to come. There are no important events on EM today. Today's key events 18:30 Fed's Mishkin speaks (USD) 01:30 Unemployment (JPY) 01:50 Retail sales (JPY) Jyske Core Positions - Recommendations Jyske Markets - FX Research http://www.jyskebank.dk/finansnyt The analysis is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor for transactions made on the basis of the information or the estimates of the analysis. The estimates and recommendation of the analysis may be changed without notice. The analysis is for personal use of Jyske Bank's customers and may not be copied.