The Week Ahead
The dollar is well and truly on the back foot as we start a fresh trading week. The greenback hit multi year lows against a number of major currencies as the Fed continued to remain dovish in the face of the global Covid 19 pandemic. The commodity currencies in particular had a very strong finish to last week with Aussie and Kiwi the standout pairs. Traders also expect further volatility in the Yen as the race hots up to replace Shinzo Abe as the new PM after his unexpected resignation last week.
What To Watch For
Data releases and central banks also become a major factor again this week as we roll over into a fresh trading month and the northern hemisphere summer comes to a close.
Key Macro Factors this week:
Covid 19: Still a major influence on market direction, with the race to get a vaccine hotting up significantly over the last few weeks. Numbers are still worryingly high in some areas and expect regional differences to create disparities across currencies and equity sectors.
RBA: The first major cab off the rank in terms of central bank rate decisions is the RBA on Tuesday with no change expected. Investors will be monitoring the statement for any changes and expect some moves in the currency which is now trading at levels not seen since later 2018.
Non-Farm Payrolls: Still probably the most closely watched data point for financial markets, the NFP’s are due out at the end of the trading week. Expectation is for a print close to the 1.5m mark but given the difficulty with making accurate predictions due to the vagaries of Covid, expect volatility around the event.
Central Bank Chat: With the new month we have a fresh round of central bank meetings and there is a long list of central bankers due to speak this week ahead of their black out periods. Officials from the Fed, ECB and the BOE are all due to speak this week and as with last week’s Jackson Hole summit, expect their words to have a significant impact on the market.