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The week is just getting underway, and one of the most relevant themes driving market moves remains the growing weakness around the Canadian dollar. This can be clearly seen in recent USD/CAD price action, with the pair gaining more than 0.6% over the last two trading sessions, highlighting that the CAD has once again lost ground against the U.S. dollar.
Recent trading sessions have not been particularly favorable for gold in the short term. XAU/USD has fallen nearly 2.5% over the last three sessions, reflecting that selling pressure is once again gaining relevance and that the metal continues to struggle to regain momentum.
Since the final days of June, the Canadian dollar has been unable to build relevant strength against the U.S. dollar. Now, average USD/CAD movements remain close to 0.2% in the short term, showing a neutral bias that has become evident again in the behavior of both currencies.
New Zealand’s Employment report may drag on NZD/USD as the update is anticipated to show another decline in job growth.
Australian unemployment may have risen, but so did all other key metrics including job growth and the participation rate. And that has likely provided a floor for AUD/USD and AUD/JPY over the near term.
Over the past few hours we have seen the Fed hint at multiple cuts this year, and Australian employment data outperform to send AUD/USD above 66c.
AUD/USD traders will keep a close eye on US inflation data to decipher Fed policy, Australia's employment report to see if another month of strong job losses ensues.
Last week we noted that bond yields could trump economic data this week, and for the most part they did. We can also extend that comment into next week, especially if they continue to retreat and loosen their grip on bearish sentiment and allow risk assets to rebound. Highlights in next week’s calendar include the NFP and ISM PMI reports, RBA and RBNZ monetary policy meetings, the quarterly Tankan survey for Japan and Canada’s employment report.
The Australian dollar has spiked higher across the board after the economy delivered another rate-hike defying report. And that has seen AUD/JPY and AUD/JPY break out of their recent consolidations to the upside.
The RBA will be keeping a close eye on today's employment figures from Australia. If they continue to outperform then it keeps some pressure on the RBA to at least strike a hawkish tone at their next meeting, or potentially hike if next week's inflation figures are too hot. And that places AUD pairs in focus, and today we're looking at a potential long setup on AUD/JPY at the lower end of its trading range.
A weak lead form Wall Street weighed on the Aussie overnight, with today’s employment miss adding to its downside pressure.
Whilst GBP as under pressure from talk of tax hikes, GBP/USD remains above a key support level ahead of today’s ISM and JOLTS job opening reports.
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