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Market Review: UNITED STATES JUNE 2018 CORE RETAIL SALES

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Market Review: UNITED STATES JUNE 2018 CORE RETAIL SALES

Market Review: UNITED STATES JUNE 2018 CORE RETAIL SALES

Economic calendar (highest volatility): 16th July – 20th July 2018:

Fundamental:

In the previous month, the United States (U.S) Federal Open Market Committee (FOMC) raised Interest Rates largely as anticipated, bringing up the benchmark rate to 2% from the former 1.75% level. Interestingly while this decision largely met forecast, the tone of the FOMC regulators suggest that two more Interest Rate hikes are likely to take place this year. This brought about sustenance in the U.S Dollar's (USD) value and avoidance of a 'sell on fact' currency play, as the formerly vague expectations for four Interest Rate hikes to take place this year has now been largely reaffirmed. The USD strengthened on Friday to 94.91 mostly driven by the June 2018 Core monthly CPI which met forecast at 0.2%. The USD maintained gains made against most major currencies. Despite the continuing strength witnessed in the U.S Dollar, the trade war between the U.S. and China is continuing to intensify, following the Trump administration’s plans to impose tariffs on an additional $200 billion on Chinese goods. The team here at FintechFX view that this could be a hindarance to the USD's strength moving forward. 

Furthermore, the team here at FintechFX view that political risk related issues might deter the rise of the USD as concerns for more aggressive retaliations out of China built in to the currency market, even though the USD was higher than most major pairs this week as the market saw that the U.S. would be better equipped to weather a slowdown in trade than other major economies. Worries of escalating trade wars with neighboring countries like Canada and European Union could be a longer-term negative for the USD as currency markets in general, do not favor any forms of trade intervention. In addition to this, the trade dispute between the U.S. and Canada continues to mount with Canada hitting back against the U.S. with its list of retaliatory tariffs after the Trump administration went ahead with threatened tariffs on steel and aluminum. Trade wars carry a major risk of escalation that could weaken investment, unsettle financial market and slow global economy.

In regards to this week, the Australian Dollar (AUD) and Great Britain Pound (GBP) will probably be one of the most-watched currencies, ahead of the released of Australia ‘s employment rate and a debate in the U.K. parliament that could reveal significant dissatisfaction within British Prime Minister Theresa May's party over her plans for Brexit. President Trump's visit to the U.K. last week also adds to uncertainty about Brexit talks and Britain's trade relationship with the U.S. post Brexit. The team here at FintechFX view the Canadian CPI and retail sales figures to bring about substantial market volatility to the Canadian Dollar (CAD) during the week as any spike in inflation that would trigger an acceleration of the pace of interest rate hikes by the Bank of Canada.

Technical:

This week, the AUD/USD presents traders with some trading volatility as there stands to be a number of crucial AUD related data scheduled for release. Firstly, RBA's Monetary Policy Meeting Minutes is due for release and the team of us here at FintechFX view that the bearish tone out most of the Australian committee members is set to continue. Furthermore, Australia is set to release employment related data at the end of the week. Nonetheless, The Australian Dollar (AUD) in our opinion, is still highly undervalued and shows some signs of rising this 2018. In the light of a potentially more hawkish statement moving forward, the market is looking at the AUD/USD to regain some of it's strength which has been lost throughout the years. However since the marker still remains largely focused on USD's strength, the team here at FintechFX view some continuity for the AUD/USD to break past crucial levels and head towards new lows as indicated in the chart below. 

Taking a slight recap on the USD/CAD, the team here at FintechFX would like to highlight that the Bank of Canada (BoC) has recently raised Interest Rates from 1.25% to 1.50%, bringing them closer to the benchmark rate of their neighbour, the U.S. Nonetheless, the team notes that a 'sell on fact' play was witnessed straight after reinforcing our views that the USD strength largely outweights. In addition as of late, the Canadian Dollar (CAD) has largely been affected by two catalyst, notably the actions taken by the U.S on wanting to impose tariffs on Canadian steel and aluminium as well as the fall in global oil prices. Therefore for the week, the team here at FintechFX view the USD/CAD to rise further. 

 

Source (Charts): https://www.investing.com

Source (Economic Calendar): https://www.forexfactory.com/calendar.php

Contact Us: [email protected]

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