Today promises to be another busy one for the currency markets as investors consider at least four major events. There are three central bank decisions and top tier economic data from the world’s largest economy to keep market participants busy.
After yesterday’s big reversal in the stock markets, the pressure on safe haven yen eased a little. As a result, the USD/JPY was able to extend its gains for the third straight session on Tuesday.
Risk appetite improved today as investors bought the latest dip in the equity indices, while safe haven Japanese yen gave way to riskier currencies in the FX markets.
It is going to be a busy week in the markets, particularly for the pound with the upcoming release of key UK economic data, BoE’s rate decision and perhaps more importantly Brexit-related headlines.
Understandably it has been a rather quiet day in the markets with North Americans out celebrating Labor Day. But with the summer holidays over, volatility should pick up from now on. In fact, this week promises to be a busy one in terms of macro events.
Mirroring the going stock market indecisiveness, the risk-sensitive EUR/JPY is currently stuck below a key technical area around 129.50. We are waiting to see if it will start to break down with some follow through now, or whether the buyers will come back and regain control.
Ahead of next week’s major central bank meetings and key data releases, the market’s focus has turned to trade tensions as the G7 meetings get underway in Canada and it looks like US President Donald Trump is taking on the whole world.
The single currency has performed particularly well against the Canadian dollar, which has been undermined by continued uncertainty over NAFTA negotiations and recent volatility in oil prices.
