TRADERS AND INVESTORS AWAIT RATE DECISIONS AND INFLATION DATA

Data watch

During the upcoming week traders and investors look to key interest rate decisions from the Bank of Canada, Bank of Japan and the Reserve Bank of New Zealand and also the CPI inflation report from the United States economy. US CPI is not predicted to be as high as last month, while the Bank of Canada could taper QE this week, following last Friday’s blockbuster monthly jobs report.

Traders also look to a key testimony from Federal Reserve Jerome Powell on Capital Hill, an important US 10-year treasury bill auction, and news on the US debt ceiling. The US economy also releases key jobs and manufacturing data this week.

Other key highlights on the economic docket include Chinese GDP figures, the monthly jobs report from the Australian economy, and CPI inflation figures from the United Kingdom, German, the eurozone, and Australia.

Monday 12th July, Japanese Producer Price Index

The Producer Price Index released by the Bank of Japan is a measure of prices for goods purchased by domestic corporates in Japan. The PPI is correlated with the CPI (Consumer Price Index) and is a way to measure changes in manufacturing cost and inflation in Japan. A high reading is seen as anticipatory of a rate hike and is positive for the Japanese yen, while a low reading is seen as negative for the Japanese yen

  • The EURJPY pair is only bearish while trading below the 129.80 level, key support is found at the 129.00 and 127.80 levels.
  • If the EURJPY pair trades above the 129.80 level, buyers may test towards the 130.90 and 132.20 resistance levels.

Tuesday 13th July, US Consumer Price Index

The Consumer Price Index is released by the US Bureau of Labor Statistics and evaluates fluctuations in the cost of living by measuring the changes in prices consumers pay for a set of items. CPI is used as the headline figure for inflation, which means that the dollar depreciates in value and each dollar is capable of buying fewer goods and services. In terms of an inflation measurement, CPI is the most obvious way to quantify fluctuations in purchasing power.

  • The USDJPY pair is only bearish while trading above the 110.90 level, further losses towards the 109.80 and 108.40 levels remain likely.
  • If the USDJPY pair trades above the 110.90 level, buyers may test towards the 111.50 and 112.20 resistance levels.

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Wednesday 14th July, Bank of Canada Rate Decision

The Bank of Canada Interest Rate Decision is announced by the Bank of Canada, and is closely followed by the central banks latest monetary policy statement. If the Bank of Canada is hawkish about the inflationary outlook of the economy, and rises the interest rates it is positive for the Canadian dollar currency. If the central bank has a dovish view on the Canadian economy and keeps the ongoing interest rate it is seen as negative for the Canadian dollar.

  • The USDCAD pair is only bearish while trading above the 1.2300 level, further losses towards the 1.2160 and 1.2000 levels remain likely.
  • If the USDCAD pair trades above the 1.2300 level, buyers may test towards the 1.2550 and 1.2650 resistance levels.

Thursday 15th July, FED Chair Powell Testimony

Federal Reserve Chair Jerome Powell testifies before Congress, and is expected to be providing a broad overview of the United States economy and monetary policy. Chair Powell’s prepared remarks are published ahead of the appearance on Capitol Hill and usually have an impact on financial market. Traders and investors will be anticipating that Chair Powell’s comments will largely be in-line with previous FOMC policy statement.

  • The EURUSD pair is only bearish while trading below the 1.1900 level, key support is found at the 1.1850 and 1.1770 levels.
  • If the EURUSD pair moves above the 1.1900 level, buyers may test towards the 1.1970 and 1.2040 levels.

Friday 16th July,  Bank of Japan Interest Rate Decision

The Bank of Japan Interest Rate Decision is held every calendar month and is announced by the Bank of Japan. Generally, if the central is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive for the yen currency. Likewise, if the central bank has a dovish view on the Japanese economy and keeps the ongoing interest rate it is negative or bearish for the yen.

  • The CADJPY pair is only bearish while trading below the 89.00 level, key support is found at the 88.00 and 86.50 levels.
  • If the CADJPY pair trades above the 89.00 level, buyers may test towards the 90.10 and 91.30 resistance levels.


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