Lets start the forecast with today’s events:
German IFO business climate index came up 0.8 points higher than expected sending the EUR/USD pair up 100 pips.
This afternoon we expect the US durable goods orders to support the dollar so we can recover some of the pips lost in the morning.
UK GDP quarter to quarter change will be an important number to watch. Any indication of improvement close to or better than the expected 0.7% will make a stronger case for a benchmark rate increase, sending the pound higher against major currencies. Careful though, we recommend playing the GDP conservatively against currencies like the Canadian dollar or the Japanese yen, as they are more likely to lose ground than other majors.
FED rate and FOMC statement! September, October, November, we are kept guessing, but chances are that the later dates are the ones analysts are placing their bets on. We expect little effect on the USD, and some volatility due to speculative bets and end of month effects.
Another important speech to be watched is that of RBA governor Stevens. Will he follow the steps of his neighboring commodity economies, New Zealand and Canada, by cutting rates? Any such indication will send AUD spiraling down against major currencies, mainly the USD.
Also on this day we have GDP and unemployment numbers from US. This quarters GDP numbers will help USD against any central bank skeptic positioning, supporting an USD up move, and potentially increasing the chances of a rate hike in September. Analysts expect 2.6% growth. Employment has shown its strength periodically so there’s not much to expect there, but another reason to buy the USD if the number perform positively once again.
The Canadian economy has not been performing well in the last months, but we’ll have to see the GDP numbers in order to get a clear picture. If we have another month of contraction the CAD will lose a lot of ground against majors, and it is already at a 12 year low against the USD.